OVERVIEW
Construction and property Student accommodation is a growing sector. SECTOR INSIGHT A R1-billion green bond has been raised by a REIT.
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ne of the greatest differences between the society that existed under apartheid South Africa and the post-democratic dispensation is in the expansion of educational opportunities. Several companies came into being to provide this new student population with accommodation at tertiary institutions. Stag African, which has built a substantial student housing project at the University of Fort Hare in the Eastern Cape, pictured, is active in three provinces. South Point has created a 1 195-bed complex in Braamfontein to go with no fewer than 15 other sites in Johannesburg and it is active in five other cities. Respublica offers rooms in six cities and there are several other companies. The boom in building and developing student accommodation has been supported by the fact that many students are funded by the National Student Financial Aid Scheme (NSFAS), providing some security for investors in the sector. Controversies related to NSFAS have recently caused some concern, but demand remains strong. TUHF is among the financing companies that provide funding for housing projects. In TUHF’s case, inner city property investors are the focus of the company’s commercial property financing operations. This includes student accommodation and a township backyard rental finance product called uMaStandi which has recently been expanded. Another aspect unique to post-apartheid South Africa is the awareness of environmental issues. A third green bond for the real estate investment trust (REIT ) of Redefine Properties was oversubscribed when it went to market in August 2023. An amount of R1-billion has been allocated across three, five and seven years.
ONLINE RESOURCES Afrimat Construction Index: www.afrimat.co.za Construction Industry Development Board: www.cidb.org.za SA Reit Association: www.sareit.co.za South African Property Owners Association: www.sapoa.org.za
SOUTH AFRICAN BUSINESS 2024
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Green buildings are now considered mainstream in the construction industry, and star ratings from Green Building Council South Africa (GBCSA) are expected in commercial, industrial and residential projects. The bond was listed on the JSE in the Sustainability Segment, a further sign that every sector is responding to the climate crisis. Covid-19 provided a sharp shock for many business sectors, but with the move towards working from home accelerated by the pandemic, none is going to have to look harder at its models for sustainability than the office rental sector. Logistics, often taken for granted in normal times, became an even more important component of the supply chain during the global lockdown and in the months that followed. FNB, which publishes a regular property barometer, has done an in-depth analysis of previous crises to help understand what may occur in the post-Covid property market. According to John Loos, a property strategist at FNB Commercial Property Finance, the most vulnerable sector is likely to be Retail Property. Smaller neighbourhood centres, with more essential items and greater convenience, will be less vulnerable. ■ PHOTO: Stag African
