The affordable housing sector in SA has received a massive boost from another major institutional investor, following the announcement that The Eskom Pension and Provident Fund committed R100 million to the development of around 20 000 new affordable homes in South Africa.
The EPPF, the second largest pension fund in South Africa, invested the money with global private equity investor International Housing Solutions, the pioneer in the field. This follows the commitment of more than half a billion rand to the fund by the National Housing Finance Corporation (NHFC) and IFC, a member of the World Bank.
The latest deal was sealed at a signing ceremony at the historic Liliesleaf Farm in Gauteng in April, where Sibusiso Luthuli, CEO of the Eskom Pension and Provident Fund, said the affordable sector has shown its ability to both improve the social circumstances of thousands of South Africans, as well as provide superior returns to investors into the sector.
IHS Fund II was launched in 2013, following the unprecedented success of the company’s first fund, the SA Workforce Housing Fund (SAWHF).
The US$230 SAWHF enabled the financing and development of more than 28 000 homes with a combined total value of more than R8.6 billion throughout SA.
IHS was the first international institutional investor to recognise the potential of developing affordable housing, also called gap housing, in African markets. In doing so, it not only opened up a valuable new asset class for investors, but ensured that thousands of families were able to afford a home of their own and start their journey to wealth creation through property ownership.
“The latest research into the provision of affordable housing in South Africa shows that it not only brings with it improved welfare and social cohesion, but is also an important facilitator of opportunities and wealth creation,” says Soula Proxenos, Managing Partner at IHS.
“And securing such significant local support for international investors further shows that the country is open for business, contributing to a healthy prognosis for the economy as a whole,” she says.