Redevelop land and buildings into Multi Family, Mixed Use, and Commercial Real Estate that provides long-term rental income as well as buy-to-sell for short term capital gain. Focus on urbanization zones, upcoming new areas with high-growth and directed toward green buildings, renewable energy systems and innovative modular designs, incorporating ESG initiatives and advanced PropTech applications. We aim to redefine the dynamic real estate sector in South Africa and globally over the foreseeable 5-10 years.
The company is incorporated as a private limited company in South Africa.
Development sites and properties have been sourced.
Modular construction quotes obtained (preliminary)
Estimated building and construction costs drawn up
Currently networking with architects, land planners and developers
Income generating within 6-8 months
Estimated project completion time is 8-12 months
The target market for the projects will primarily include low-to-middle-income individuals and families that are unable to rent or buy homes in the city and who are seeking affordable housing options, students entering and completing degrees and studies. Through government initiatives, these families can obtain reduced mortgage financing to own a home within the estates. Additionally, the project will cater to individuals interested in sustainable living and sense of community. Lastly, in the commercial sector, business owners, SMME's and corporations seeking storage space, co-working environments and conceptual workspaces. We estimate that the age group will vary from young professionals and graduates to adults under 60 years.
Problem or Opportunity
South Africa is urbanising swiftly, as is the continent. In the last decade, the urban population has expanded at a 2% yearly rate, and by 2030, 71% of South Africa’s population will live in cities. Despite supplying roughly 3 million state-sponsored homes to low-income households since 1994, the government hasn’t kept up with the metropolitan population’s housing needs. In 2018, 26% of urbanites lived in slums. While rural income poverty is higher (81%) than urban (41%), urban poverty is often worse. Two areas that can be attractive to potential buyers in the lower end of the market: firstly, the offer of green mortgages, albeit at reduced interest rates, and lower utility costs associated with “green” buildings in housing developments. Secondly, building plans for houses less than 80m2 showed a significant 68% increase year-on-year from January to May 2022, suggesting an increased demand for smaller housing units.
1. Balwin Properties - large developer however based in Johannesburg and not in Affordable Housing segment
2. IHS Investments - large developer with diverse portfolio however not large scale modular housing
3. Other developers in the country that focus on multi-family housing however none are incorporating modular construction designs on mass scale.
Advantages or differentiators
The distinction between competitors and our business is utilizing modular construction that yield ECG practices, green energy, and short turnaround times of 8-12 months. This offers a distinct advantage to develop more properties quickly and efficiently for capital gain and long-term rental income.
The majority of properties will be rented out to sustain long-term, sustainable income streams for the company and investors. There will also be options for sale of a percentage of units for capital gains to accommodate exit strategies and short term profits.
Profit Margin of 20-30% per unit on sales
Projected Rental Income of Units:
Rentals will vary from R5000-R9000 per unit, depending on location and demand. With scenario A of 500+ units, this will offer monthly revenue of rentals that will be managed by the company and offering monthly dividends to shareholders/investors with 85-100% occupancy rates and 10% annual increases.
Interest rate, %
Type of pledge
Pledge and assets
Properties acquired through company will hold positive, debt-free asset value.
The business will use the funding to acquire office space and begin the process of applying for capital to purchase and develop the first property for redevelopment into student housing.
The business model is to acquire and redevelop properties that show high growth potential, specifically within urbanization zones of the inner city of Cape Town metropolitan.
Additional funding sources may include government grants, angel investors and VC firms.
Solution (product or service)
The target market for the low-cost housing development will primarily include low-to-middle-income individuals and families who are seeking affordable housing options. Additionally, the project will cater to individuals interested in sustainable living and a sense of community. There is a significant demand for affordable housing in many regions of South Africa. Rising urbanization, population growth, and limited supply have created an undeserved market segment. By offering multiple housing options, the company aims to tap into this demand and provide a solution for those seeking decent and affordable accommodation. This will be addressed by:
1. Multi-family Estate Complexes
The housing developments will consist of one and two-bedroom prefabricated/modular housing units. These units will be constructed off-site, using high-quality, sustainable materials. The prefabricated approach allows for faster construction and cost-effective production.
2. Student Accommodation
The need for student housing close to schools and universities is growing year on year, according to Statistics South Africa. We aim to build affordable student housing to address this need that proves viable as long-term, sustainable revenue streams.
2. Off-Grid System
Developments will incorporate off-grid power systems to reduce reliance on traditional energy sources. Wind turbines and solar panels will be installed to generate renewable energy for the residents. This approach will lower utility costs for tenants and contribute to a more sustainable living environment.
4. Commercial Real Estate
By diversifying our portfolio into the commercial sector, we will create business parks that focus on small industrial units, co-working spaces and self-storage units in areas where new communities are growing and demand for these premises is increasing, getting a foot in ahead of time.