FNB in interesting housing projects

SOUTH AFRICA’s four major banks have signed a memorandum of understanding with the Minister of Housing and the Banking Association of South Africa to assist with the financing of at least R42 billion worth of new affordable housing by end Dec 2008 – R8.2 billion of which will be contributed by First National Bank (FNB).

Gerhard Zeelie, CEO of FNB Commercial Property Finance, says various projects are being looked at in the Western Cape. Although it would be premature to divulge how these low cost housing deals would be structured, it could well be undertaken on similar lines as some successful, recent projects undertaken in Gauteng.

Here FNB Commercial Property Finance is assisting with the provision of over 3 000 quality low-cost houses to be built near Protea Glen in Soweto over the next two years.

Development of the new suburb, called Glen Ridge, sees FNB Commercial Property Finance providing R311 million worth of developer finance in a township where there are approximately 11 buyers to every property that is considered old stock (privately-owned and council houses) and seven buyers to every property that is a new development.

In another public-private partnership that aims to help address the current housing backlog in the province, FNB Commercial Property Finance has teamed up with Talk Radio 702, construction firm M5 Housing and the Gauteng Department of Housing that will see 702 houses being made available within the government-subsidised Cosmo City housing development.

Cosmo City is a mixed-use, integrated housing development near Kya Sands in northern Gauteng. The Department of Housing currently provides subsidies for the construction and servicing of 9 000 units, 5 000 of which are fully-subsidised, 3 000 of which are finance-linked units and 1 000 of which are institutional rental apartments.

To improve access to credit, FNB established a focused business unit called FNB Housing Finance with R200 million in end-user finance in a tailored credit approach for this market.

To address the shortage of housing stock, FNB has developed an innovative approach through collaboration between its business units, which has seen the FNB Commercial Banking division provide additional R168 million in development funding for the Cosmo City Project. Construction on the houses starts this month and is expected to be completed by December this year.

Zeelie says the bank is committed to helping the country overcome the housing shortage at the lower end of the market, adding “we will do our best to provide finance for developers to build the thousands of houses we need.”

Cosmo City is a mixed-income development, hosting low- and middle-income earners. It covers an area of about 1 200 hectares, of which two hundred hectares are being preserved as open spaces for the community, and conservation. A further 100 hectares have been set aside for commercial and industrial purposes, while fifteen hectares will be used for schools, churches and social services. When completed the development will feature twelve schools, several clinics and libraries, a police station, forty churches, and sports facilities.

“Through FNB’s Commercial Property Finance division, we have made R168 million available to the developer for the construction of houses in the Cosmo City project. This is in addition to the millions of rands FNB will be offering as loans to individual buyers of houses in the project,” says Zeelie.
 
Source: Cape Business News - www.cbn.co.za

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