SA Affordable Housing January / February 2018 // Issue: 68 | Page 29

FEATURES
“No one thought of building green affordable housing. It’s
good because they made us think; our investors made us
change our thinking,” he recalls.
Initial reaction to the idea is that it will be expensive,
however through research and working closely with the IFC
on their Excellence in Design for Greater Efficiencies (Edge)
tool they realised the opposite. Through working with the
tool and selling the idea to developers, perceptions by
contractors and developers alike have changed.
“Now they are getting used to it and its spreading in the
market. We don’t do anything that isn’t green anymore. The
cost/differentiation is very small, and the pay back is quick,”
he says. The Edge tool is very simple to use. It can be found
on the Green Building Council of South Africa’s (GBCSA) site,
there is also an app available. “It lets you know the
efficiency of your project as you tick what you’re using to be
efficient,” he says.
One of the paybacks of going green is that the tenant
saves between R300 and R600 a month on utilities. “Solar
is one aspect of greening a building but there’s actually a lot
of easier ways to do this,” he says. He cites adding low flow
taps and shower heads, dual flush toilets, looking at the
window to wall ratio, adding a roof overhang, adding low
emitting bulbs and installing smart meters in the unit to
measure consumption as some ways of being Edge
compliant. He reiterates that the discussion around
alternative building materials (that are more efficient than
the usual brick and mortar) has been going on for about 30
years but no viable conclusion has been reached.
“The reality is nothing has been built at scale that is
cheaper. Certainly, it would be more efficient and green,”
he says.
USING WHAT THE INDUSTRY HAS
The industry has many challenges, but the major issue is
accessing affordable land in high income areas. Land in
these areas is typically expensive and makes it difficult to
develop affordable housing closer to the workplace.
He insists that this is where government should get
involved and ensure that high income areas have access to
affordable housing and housing projects. He proposes that
government makes land available land as well as parastatal
land, on condition that it will be used for green and
affordable housing. This would make it easier to operate
and supply houses.
“We built houses right next door to Dainfern, Fourways
called The Paddocks, these houses were sold for R399 000.
You can imagine that people there were unhappy, but it was
awesome and well located. It is doable if you can get the
land at the right price,” he says.
It is no secret that the relationship between the private
sector and the government is quite tricky, Wesselo says that
government and private sector cooperation can thrive in
addressing the land issue.
The one successful partnership between government and
the private sector that Wesselo refers to is the Fleurhof
project. Although on past projects they’ve experienced
sign-off and approval delays, which has cost them money,
the Fleurhof project was different.
“The City [of Johannesburg] was heavily involved.
Infrastructure grants were put into the project and the
results are visible. When it happens, it can really deliver.
You don’t often see delivery like that. We should do it more.
We don’t do it enough,” he says.
Another challenge is investor contention regarding the
political uncertainty currently facing the country. “We must
convince them to look past all those things and to the
future,” he says. He adds that the uncertainty feeds into
local authority delivery which can get difficult when it
comes to signing off and approving plans. “But I do think
political certainty will improve that and the sooner this
happens, the better,” he says.
The current state of the economy is also worrying
especially from a sales point of view. South Africa is facing a
possible downgrade and an interest rate cut was forecasted
but the opposite may occur. “Banks tighten up on lending
criteria when interest rates go up thus affecting the sales
environment,” he says.
The rental environment is also under pressure due to
tenants possibly facing retrenchment but Wesselo is happy
to report that the IHS’s rental portfolio is doing very well.
“Proper management is key to the rental market. We’re not
seeing the same increases from two or three years ago. It’s a
strong market due to the demand for housing,” he says.
WORKING FOR IHS
Before working at IHS, Wesselo started out as a lawyer.
After five years in the field he realised he didn’t want to do
it anymore and ended up at Group 5. His first stint with
providing housing was in the early 1990s when RDPs came
to conception.
In 1999 the All Africa games were held locally and
instead of putting athletes in hotels they decided to put
them in a village in Alexandra that later was handed over to
people who need housing. “After the games, it was a very
complex transaction. It was a joint venture between two to
three companies. We used money meant for hotels, housing
subsidies and infrastructure subsidies from different
government departments. That kind of got me interested in
this space,” he recalls.
From then on, he’s been in financing and banking, which
is all tied to property. “I was head of property equity
investment at Absa. We started a company called Diliculo,
which was meant to build 10 000 affordable housing rental
units that would then be listed,” he says. This was also
around the same time that IHS approached him to run
the company.
“It’s been great growing the company from a small
business to IHS today with a strong support from our
shareholder and fellow managing directors. The company
has a double bottom line aspect to it because you can make
money out of it and there’s a big social impact element to it
that you see happy tenants and owners,” he says.
“IHS is really close to my heart,” he shares. He describes
the office environment as relaxed. “We like to work hard
and have a bit of fun and see results.”
One of his goals is to grow the business carefully into
other parts of Africa. He adds that they’ve raised funds for a
few countries. Kenya has also received some attention from
them and they are in the early stages of investigation.
“There’s a big need everywhere for affordable housing
it’s just a matter of matching opportunity from a private
equity aspect. We examine opportunities very carefully,”
he says.
AFFORDABLE
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JANUARY - FEBRUARY 2018
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