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A new development in Kwanabuhle by JT Group is helping to answer the Eastern Cape’s need for housing and infrastructure, Ruari McCallion learned from Bennie Jacobs. 2
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JT Group FEATURE
sustainability, choice and identity. JT GRoup is at the forefront of efforts to answer those needs. Its Kwa Nobuhle project, at Uitenhage, near Port Elizabeth, is a massive undertaking – it’s virtually a new township, with over 6000 units scheduled for construction. Something this size doesn’t go up overnight; it requires planning and is dependent on the availability of skills, infrastructure and materials. “It’s probably one of the biggest developments in the Eastern Cape and is going
JT Group is one of the largest developers of affordable homes in South Africa
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ll of South Africa needs new, improved and regenerated living and working infrastructure but the requirements of the Eastern Cape are particularly acute, according to Bennie Jacobs, managing director of JT Group. “The Eastern Cape is notorious for having a massive backlog of housing – the Nelson Mandela Bay municipality is estimated to have a need for around 80,000 units,” he said. Part of South Africa’s ‘Breaking New Ground’ initiative is implementation of the principles of sustainable communities, which encourages the incorporation of integration,
to be at least a 12 year project,” he explained. “It will be a mixture of bonded, owneroccupied and rented stock.” The rental stock will be owned by a mix of private landlords, government, investment institutions and other parties. JT Group are land developers. It buys land, gets zoning approval, installs services and makes the properties available for others, working with partners including Kalgrove, Cosmopolitan, RBA, Trustrgo and others. “Our business model is based on sound commercial reality,” he said. “We have found that we make a much better return on our investment if we focus on the development process and leave the construction to others.” JT Group had a construction division and it was pretty well-regarded – it won a ‘highly commended best home builder’ award for its activities in the affordable housing sector, from NHBRC in 2005 in recognition of its work in Goateng. That was just a month before it took the decision to close its construction operations. That may seem paradoxical, to pull out of an area where it www.southafricamag.com
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seemed to be doing well, but it is generally accepted that companies do best by focusing on their core expertise. “While we were dual-role, our construction division was really a spinoff from our main operations,” said Jacobs. “We’re now completely focused on land development.” While JT Group itself employs only around 95 people directly it is responsible for much wider activity, with its commissioning of consultants, contractors and their supply chain of smaller organisations. The company develops its projects in phases of around 1000 units a time. It maintains quite a tight control of quality by strictly monitoring the developers who get involved. When a phase is opened for development, around 30-40 per cent are reserved for Black Empowerment builders at no extra cost and with certain advantages over larger organisations, in order to help them flourish.
“The top structure developers sell the building project to the end user, with bank finance. The developer builds only – they never actually own the land. The constructor is paid from the development bond,” he said. “The second anyone blots their copybook, they are removed from the project. We screen all the all the smaller builders ourselves; the larger operators are covered by NHBRC but everyone has to have an NHBRC enrolment certificate. If they mess up, they’re excluded from all construction opportunities with us in the future.” It’s a pretty firm regime but quality is an essential cornerstone for JT Group. It doesn’t want its reputation compromised and nor does it want to see valuable investments go sour. It has contributed to the development of small businesses from the previously disadvantaged community by assisting them in their progress from subcontractors to becoming fully-
Probably one of the biggest developments in the Eastern Cape and is going to be at least a 12 year project
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JT Group FEATURE
fledged contractors in their own right, able to work and operate totally independently. “There is a massive shortage of land for development,” said Jacobs. “In any area, we’re about 80 per cent below market needs but South Africa is probably one of the most difficult countries in the world to develop in.” It’s a big country with a lot of undeveloped land so that statement comes as a bit of a surprise. He went on to explain why that is the case. “You can’t build in the middle of nowhere. You need water, sewage, roads, electricity – there is a lot of good land but the government won’t allow development if it doesn’t have access to mains services.” With the support of Nurcha, JT Group has focused its resources and expertise on providing homes for the merging and newlyempowered mass of people, which is a sector that much of the conventional construction industry has avoided. The challenge for the company – for any developer – is to understand the system and how to make it work. Government prescribes how long a project should take but that isn’t the end of it: there are rafts of specific and broader approvals to get in place before work can go ahead. Jacobs mentioned a specific problem in the Free State, where a project is awaiting provincial approval. “The committee that will grant the approval hasn’t been appointed yet. It isn’t deliberate obstruction – it’s just ongoing inefficiencies, which have to be dealt with as part of the country’s development.” JT Group is one of the largest developers of affordable homes in South Africa. It has 52 major projects in hand as of Q1 2010. Its activities in the Eastern Cape are carried
out under the name of Property hunt Eastern Cape (Pty) Ltd, whose chief executive officer is eastern Cape businessman Mark Mans. He holds a 50 per cent stake in the company. It is Property Hunt that is developing Kwa Nobuhle, which extends to 500 hectares and will have a retail complex; 13 business/ mixed use units; six churches; four crèches; five schools; a mix of apartments and houses; parks and open spaces; and everything else required for a community to flourish.
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