R550m investment to support Divercity in expanding access to affordable housing in SA

Construction at Barlow Park.

Proparco, the French development finance institution, and 27four, a local investment manager, has led a R550 million investment in Divercity Urban Property Group alongside reinvestment from its existing shareholders to fund portfolio growth and balance sheet optimisation.

Most of South Africa’s affordable housing is located at the urban periphery, far from economic opportunities and essential amenities. This urban sprawl unfortunately perpetuates Apartheid-era spatial segregation while undermining numerous social, developmental, and economic outcomes.

Divercity is a South African investment platform dedicated to affordable rental housing with supporting amenities in high-density and centrally located urban precincts.

Through this investment, Proparco and 27four will boost the affordable rental offering in South Africa which has been identified as a priority by the government given the severe housing shortage.

Harvard University’s Growth Lab recently released its ‘Growth Through Inclusion in South Africa’ report that identified spatial exclusion as one of the main barriers to South Africa’s economic growth, together with state capacity issues. To turn the country around and get South Africa back on a growth track, their recommendations include building more dense housing clusters closer to business centres. Divercity does exactly this, and with this R550 million transaction, Proparco has catalysed foreign direct investment for South Africa while leveraging the deep local context understanding of their in-country investment partners 27four, working together in a high-impact deal that greatly benefits the South African market.

Beyond the support to regenerate South African cities, this project also gives Proparco an opportunity to support energy-efficient building programmes targeting EDGE certification. It aims to achieve several development goals (including SDGs 5, 8, 11, 13) through job creation and combating gender inequality by providing safe and best-in-class accommodation for tenants, of which women who account for approximately half of Divercity’s tenant base,” commented Gregor Quiniou, Principal at Proparco.

“As South African investors we are painfully aware of the critical shortage of quality and well positioned affordable accommodation in our cities. We are excited by the innovative approach of Divercity to this perennial challenge and are pleased to be able to fund their expansion,” said Mardé van Wyk, Principal at 27four.

This significant investment in Divercity will enable us to develop over 2 500 new apartments. This helps us to demonstrate the impact and commercial viability of this economically productive, sustainable and fundamentally empowering urban development model,” noted Carel Kleynhans, CEO of Divercity.