Sectional title developer Balwin Properties and listed residential fund Transcend announced an alliance on Monday to develop 8‚900 rental apartments worth about R6.4bn over the next six years.
The venture will involve five projects in Gauteng.
Balwin said it would be responsible for design and construction. It will also market and secure lease agreements for the apartments.
Transcend will then have the opportunity to buy fully tenanted apartments in phases from Balwin.
Transcend’s intention is to participate in all five developments‚ although they will be treated and reviewed independently.
Balwin Properties CEO Steve Brookes said the developments would add better quality stock to the rental housing market.
Green Park is the first development earmarked for this alliance.
Located in Boksburg‚ the first of the 1‚200 apartments are expected to be delivered to Transcend in early 2018.
The development will use solar energy and provide high-speed fibre connectivity.
Transcend is a real estate investment trust (Reit) created by private equity group International Housing Solutions (IHS).
Listed on the JSE in 2016‚ Transcend focuses on specialised residential property assets. It currently holds a portfolio of 13 properties‚ with a total of 2‚472 units‚ located primarily in Gauteng‚ as well as the Western Cape and Mpumalanga.
As with Trancend’s existing portfolio‚ IHS will continue to provide asset management services to Transcend through IHS Property Management.
Transcend Rob Wesselo CEO said: “This alliance is perfectly in line with our strategy to focus on a defensive asset class‚ that delivers affordable housing rentals to a heavily underserviced portion of the real estate market outside of conventional inner-city residential rental housing.
“Rentals will be aligned with Transcend’s portfolio and are expected to range from R4‚000 to R8‚000‚ which is currently the sweet spot for a growing middle class in SA’s urban centres.”