NEWS over the next two years , but this is currently under review due to the impacts of the pandemic and the increased focus on online learning .
He says these factors are contributing to the need for a different developer mindset . Additionally , older developers are retiring or moving into the suburbs with new ones struggling to gain momentum due to difficulties in applying for traditional loans in these challenging economic times .
“ And yet , there has been resilience in our market . From Woodstock into Bellville and further up to Kuils River . Also , Durbanville and the informal sectors in Stellenbosch , Worcester , and Wellington have shown a high demand for affordable housing due to the number of agri-business based in these areas ,” adds Nel .
CHANGING DYNAMICS
Velda Derrocks , regional manager for the Cape region at TUHF , agrees . “ Many of the vacancies are driven by properties in the CBD and AirBnB units that are not used or being put out in the market for normal rental . However , the affordable housing space is well serviced with not much capacity on offer . Even so , the Cape Town market has been through a challenging few months with some TUHF clients opting to sectionalise their properties and sell off the individual units . All indications are that bad debt and vacancy levels are normalising and edging towards pre-COVID levels .
But this does not mean it is not possible to find investment potential .
“ Once we started building an understanding of how to operate in a COVID-driven market , we have seen good collection levels , lower vacancies , and even demand for new units in the Western Cape . Underpinning this resilience is good governance , the type of products available , a transport system that works , and visible law enforcement ,” says Derrocks .
Nel believes that because the City Council only approves a limited number of new developments annually , and due to the Council ’ s thorough understanding and application of town planning and associated laws , there is more manageability of the supply and demand curve .
“ The market in the Western Cape has remained relatively flat over the past several years . While certainly having an impact , COVID has not been as devastating here - from a rental perspective - as some other nodes in the country . For example , we have seen significant interest in new areas like Boston and across the eastern seaboard past Blouberg and Table Bay . Historically , these areas see much investment from long term rental investment . That has changed with zoning rights in place creating significant potential for affordable housing there ,” says Nel .
REBUILDING FOR THE FUTURE
Nel expects the Western Cape to show robust growth and returns over the next five years with new developers coming into the market .
“ Office and industrial conversions into residential units will likely happen as the market moves into different , untapped areas . Work-from-home has driven a new product from a residential topology perspective . From our side , we have been continually engaging with our clients and developers to get renewed growth going ,” adds Nel .
This includes hosting video conferences with clients and associated professionals that include engineers , quality surveyors , and others to expand the TUHF network in the market . Engagement has been focused on word of mouth and these online activities .
“ We have also started engaging with the City Council and its various departments online . This has given us a new awareness of their processes and the different ways that are best to work with each department . Our focus for the shortterm is to be consistent in our approach and play a prominent role as facilitators between developers and clients ,” he says .
For Derrocks , TUHF realised it needed to adapt to different ways of liaising with clients . “ This has resulted in many innovative approaches that we will continue to build on . Virtual meetings might have replaced face-to-face discussions , but our focus remains on adding value to our clients .”
“ Nel expects the Western Cape to show robust growth and returns over the next five years with new developers coming into the market .”
BRANCHING OUT
“ Throughout all this , we still believe in the potential of the affordable housing market in the Western Cape . We can facilitate and assist developers to bring quality products to a market where there is significant demand for it . For TUHF , it is about remaining discerning on the entrepreneurs and developers we partner with ,” says Derrocks .
Nel adds that TUHF will continue to educate the market on the potential of affordable residential renting properties . “ People need to change their views of affordable housing , especially in the Voortrekker corridor . By engaging with the market , we want to attract the right type of entrepreneurs and developers ."
Khulasande Naku , national operations coordinator for TUHF , says this reflects how TUHF is still a good business that does deals that make financial sense regardless of external market forces like the pandemic .
“ Our focus is still on empowering the small to emerging entrepreneurs in the property space and diversifying the face of inner-city property ownership , especially in Cape Town . We are continually looking for right-sized projects that can be turned into quality assets for the business and our clients ,” concludes Naku .
www . saaffordablehousing . co . za JULY - AUGUST 2021 7