ADVERTORIAL

By Rory Macnamara

ALL PHOTOS BY GPF

Ms Mashiane explains , “ Investment in affordable housing is viewed by most financial institutions to be of high risk with relatively low margins , the GPF was brought in to entice the private sector involvement through our funding model .”

The GPF has four programmes that are used to intervene in the market , namely , Rental Housing Fund , Social Housing Fund , Student Accommodation Fund and the Entrepreneur Empowerment Property Fund ( EEPF ), which is our main focus in this article .

The EEPF was established in 2010 to contribute toward addressing transformation challenges within the property sector . The property sector has not fully transformed to include participation of black-owned companies in the delivery of affordable housing .

Mashiane continues , “ The programme was designed to encourage participation of the historically disadvantaged

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individuals owned companies to gain entry into the sector and to actively participate in the delivery of affordable housing . Participants in the programme were initially identified , through an open tender process , and they were placed under our mentorship programme . The purpose of the mentorship programme was , amongst others , to enable them to identify suitable properties for development , to package bankable property investment proposals , identify risks during the construction as well as post investment and generally to understand what it means to invest in property .

Since its inception there are around a hundred companies in the programme of which 50 have secured projects , and around R500-million of government funding was made available toward funding projects within the programme . Our projects are located across the Gauteng Province within in-fill sites in areas such as inner city of Johannesburg , Kempton Park , City of Tshwane / Pretoria North . Over 1 700 units have been completed by these entrepreneurs . We have forged successful partnerships with institutions such as Trust for Urban Housing ( TuHF ) and the Public Investment Corporation ( PIC ) through their subsidiary in co-funding these projects .”

SAAH then asked about funding and the GPF offering as compared with other funders .

“ Our funding is concessionary in a sense that we provide up to 40 % of the total project cost as junior loan with with a minimum of 5 % equity on project cost and leverage the balance of the funding from our co-funding partners . Our base pricing is three months ’ Johannesburg Interbank agreed rate ( JIBAR ). This is relatively low when compared to other funders in the market . Our loan term is between 15 and 20 years ensuring less pressure in the project ’ s cash flows . In 2010 when the programme was initiated , the entrepreneurs were only required to contribute R200 000 as equity for the project . Most importantly we wanted commitment and a handson approach from our entrepreneurs – they were required to take ownership of the project to ensure skill transfer that will enable them to increase their portfolio and approach any financial institution on their own . We also recommend that they appoint a reputable property management company .”

SAAH asked if this was drawing in the private sector . “ Yes , certainly . Not only financing but also the expertise we bring in like architects , engineers and building professionals .”

4 NOVEMBER - DECEMBER 2020 SAAffordHousing saaffordablehousingmag SA Affordable Housing www . saaffordablehousing . co . za