The Affordable Housing division at Nedbank Corporate and Investment Banking has granted R62.3 million loan towards a new affordable housing development for rental market in Centurion.
The loan facility was granted to Rilamax (Pty) Ltd, which forms part of the Realgrowth Group, for its ‘Midnight Valencia’ affordable housing rental development.
Recent studies suggest that while the demand for affordable housing is on the rise, affordability remains a barrier for millions of South Africans in this segment, resulting in renting increasingly becoming a more feasible option than buying.
According to a July 2015 note by the Centre for Affordable Housing South Africa on ‘Understanding the challenges in South Africa’s Gap Housing Market and opportunities for the RDP Resale Market’, developers report that for every ten buyers they present to lenders to apply for mortgage finance, two are declined for adverse credit track records and five are declined due to affordability constraints. As a result, only three of every 10 applications submitted are approved, making renting the alternate choice.
“The single most important decision that a property developer makes in any endeavour, is the choice of financial partner for each project”, says Erika Sutton, the CEO of the Realgrowth Group. “At Realgrowth, our brand promise seamlessly aligns with the Nedbank culture of ‘making things happen’. We believe in the integrity of the Nedbank brand, and decided to take hands with them for the development of ‘Midnight Valencia’. Our specialisation in affordable housing follows on from our intensive research into the specific housing requirements of the young professional indicated to us that this unique demographic group prefers spacious living units that are safe, easily accessible from main amenities and routes, with the popular ‘lock-up-and-go’ feature that consistently increases in demand. Realgrowth managed to position itself well in this unique market sector by offering ‘Midnight Valencia’. This is a stylish, yet affordable living space that caters for the young professional generation as they commence with their ascent up the corporate ladder and also for those that want to scale down due to the current economic crunch. ”
Located at 245 Basden Avenue, Lyttelton in Centurion and comprising of 224 rental units, these apartments are available for rental purposes and feature 1 bed and 1 bath as well as 2 bed and 1 bath units with rentals ranging between R4,800 to R5,800 per month.
Midnight Valencia comprises of 4-storey walk-up residential blocks, a design feature that is already gaining popularity within affordable rentals for its ability to assist in the densification of the land available, thus enabling an economical construction with minimised maintenance costs in the future.
The location for the development has been identified by Realgrowth due to its close proximity to schools, hospitals and government offices. It is also located in a prime position where rentals in the area are in high demand as many individuals are employed in the vicinity as teachers, nurses, policemen and government workers. Its close proximity to public transport nodes, including the Gautrain, allows for easy access to the N14 and N1 highways, and areas such as Sandton, Midrand and the Johannesburg CBD, making it an increasingly popular location.
“As a financier to affordable housing property developers, one of our mandates is to ensure that our clients and their consumer needs are serviced and met by consistently providing agile solutions. This principle has been applied in the decision to provide financing for Midnight Valencia, a development that has been constructed and smartly designed to respond to the current market’s current demands for affordable housing,” says Manie Annandale, Head of Affordable Housing at Nedbank Corporate and Investment Banking.
Realgrowth (Pty) Ltd, a new entity set up by several experienced individuals for undertaking affordable developments, approached Nedbank due to the bank’s strong position in funding these. Rilamax (Pty) Ltd is 100% owned by Realgrowth Developments (Pty) Ltd and Midnight Valencia was the first development by the newly established entity.
Annandale says: “Affordable home ownership is a critical driver of the economy and as such, we are proud to be associated with this property development. We also look forward to good returns for the development – not only in socially responsible terms but also in the economic sense with local government earmarking Centurion to house ‘African Gateway’, one SA’s largest public-private partnership developments, in the near future.”
Construction of ‘Midnight Valencia’ was undertaken over five phases and was completed on the 1st of September 2015.