Real Estate Investor Magazine South Africa September/ October 2019 | Page 16

COVER STORY
Kwazulu-Natal – Durban central, Albert Park, Warwick Avenue,
Umbilo, Overport and Pinetown central
Urban Development Zone tax incentives
The Urban Development Zone (UDZ) tax incentives
administered by SARS aims to promote the upliftment and
regeneration of particular areas by rewarding private sector
residential and commercial developers who build or refurbish
in these areas. SARS seeks to address the issues of urban decay
within inner cities and to maintain existing infrastructure while
encouraging investment in certain properties.
The UDZ incentive is calculated in different ways, depending
on the type of development that is improved, added to low-
cost housing included.
Here are just a few examples below of how UDZ can be
used. The full tables are available for Download on www.
reimag.co.za
Who should invest?
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Entrepreneurs or individual investors looking to
diversify their investment portfolios
Small, medium and large-scale property developers
Investors looking to take equity in an existing or new
residential investment or building
Existing investors and developers in the region
planning to expand and leverage new infrastructure
investments
UDZ Incentives table
1
Trust for Urban Housing
Finance (TUHF)
Trust for Urban Housing Finance (TUHF) is a public
company which helps potential investors become property
entrepreneurs and offers loans for the purchase and/or
refurbishment of inner-city residential properties.
TUHF provides access to finance for entrepreneurs:
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To purchase and convert or refurbish inner–city
buildings within South Africa
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To provide affordable residential rental units
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Up to R50 million for majority residential, mixed-use
developments
It also provides follow-up support, guidance and risk
management for new entrepreneurs. They can only lend to
entrepreneurs as much funding they are able to borrow or
raise from their funders and shareholders.
For more information: www.tuhf.co.za
2
International Housing Solutions
(IHS)
International Housing Solutions (IHS) is the
leading fund and property manager in the affordable housing
sector in Sub-Saharan Africa. IHS currently manages three
multi-investor finds, one single investor fund and a publicly–
traded real estate investment trust (REIT).
Their fund strategy is tailored to local market conditions
where economic and political conditions are supportive
of development and private market investments. IHS is
committed to partnering with local companies to make the
best use of existing capacity while minimizing investment risk.
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Fund managers considering capital investment in the
residential sectors
Private or government corporations wishing to
construct staff housing in the area
Financing and funding opportunities
A growing number of funding and financing opportunities are
specifically focused on the affordable accommodation sector.
They tend to be secondary lenders outside of the traditional
banks.
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A number of major established funds provide finance
and technical support to existing and new affordable
accommodation projects
National focus on public-private partnerships through
the newly formed Human Settlements Development
Bank
Mature banking sector is expanding finance to more
affordable housing developments
SEPTEMBER/OCTOBER 2019 SA Real Estate Investor Magazine
Their investments are diversified across geographic regions
and product types. We aim to go beyond simply building
housing units to creating sustainable communities through
our mixed-income and mixed-use development model.
Investment focus
IHS invests equity alongside developer partner’s equity and
local debt in for-sale or rental properties.
These equity investments are in:
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Either new construction or rehabilitation
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Typically located in large urban areas
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Aimed at energy efficiency
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Aimed at generating social and environmental
benefits beyond addressing housing need
IHS also invests by purchasing turnkey developments from
experienced developers.
The multi-investor funds include:
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South African Workforce Housing Fund (SAWHF);
low-cost housing opportunities for workers at state
agencies e.g. Eskom
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IHS Fund II SA: A multi-investor fund targeting
investments in affordable housing, including green
housing projects within South Africa
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Transcend Property Fund: focused on delivering housing to a
heavily underserviced portion of the real estate market with
affordable rentals ranging from R3000 to R7000 per month
For more information: www.ihsinvestments.co.za