WHILE South African developers are concerned about government’s proposal for 20% of new residential property developments to be set aside for low-cost housing, UK developers are making a similar system work.
Speaking at the 38th annual convention of commercial property association Sapoa last week, Simon Fanshawe, chairman of the Economic Partnership in the city of Brighton and Hove, in Sussex, said there was no reason such a proposal could not work in SA. The Economic Partnership is the economic strategy body for Brighton and Hove.
He says although the percentage put aside for affordable housing depends on individual developments, a 20% rule for affordable housing in a large development can be managed. Although 25% of developments of more than 10 units are set aside by the UK national housing inspector for affordable housing, Brighton and Hove has been opting for 40% of developments of more than 10 units.
Fanshawe says this percentage is being used in two planned developments consisting of 800 to 900 units. “These developments are working. They are going through a planning process and nothing has been built yet, but developers are happy to build them.”
The South African government could be strict on a 20% rule because it owns a lot of land developers would like, he says.
“Government should realise it has a lot of leverage.
“If I were the government in SA, I would concentrate on the leverage the land has in the partnership I make.”
He says SA is economically stable and this supports affordable housing initiatives.
“You don’t, as a developer, need to get in and out fast. Your strategy as a developer should be to create the next generation of home owners.”
He says mixed-income developments work in the UK because they draw the poorer sections of the population into home ownership. Fanshawe says he thinks developers in SA should “embrace” the 20% rule.
“Therein lies their future asset generation. Get them in now.
“This is your way of building the next generation of home owners. Look for long-term profits and build mixed communities and build stability into the system,” he says.
South African developers are concerned that such proposals could put pressure on already squeezed profit margins. But some are thinking of creative ways of providing affordable housing and limiting pressures.
One of the “creative ways” to alleviate the housing shortage in the this market is to develop it as part of a mixed-use development model, says well-known Cape Town developer Johnny Rabie.
Rabie, chairman of Rabie Property Developers, said at the Sapoa convention that the mixed-use development model enabled the developer to use the profits of a mixed-use development to cross-subsidise the affordable housing portion.
Rabie said his group had used such a model to provide 800 affordable housing units at Westlake in Cape Town. This development included 300 upmarket residential units, office space, a school, mixed business space — including light industrial property — and a shopping centre.
“It is one of the creative ways to alleviate the housing shortage in the affordable housing market,” Rabie says.
He said this model could work on state-owned or privately owned land.
