NASTASSIA ARENDSE: JSE-listed Balwin properties and Transcend Residential Property Fund announced an intention to bring to market up to 8 900 quality affordable rental apartments across five developments in key Gauteng nodes over the next years. I spoke to Steve Brookes, who is the chief executive officer of Balwin Properties.
Steve, take me through what prompted this particular alliance with Transcend.
STEVE BROOKES: Since we listed we promised the market we’d be doing a rental development and we looked into it in great depth and we’ve come up with this model. The model is in the affordable space, between R4 000 and R80 00 a month rent, and we like the design that we’ve done through [our] architects. It’s a very efficient design and it still gives us our margin that we want. Transcend are happy with it that’s how the partnership started.
We’ve done business with Rob Wesselo on two previous transactions, and now we’ve come to an agreement on 8 900 apartments spread over five developments.
NASTASSIA ARENDSE: And in terms of the responsibilities, what will Balwin be doing and what will Transcend be doing?
STEVE BROOKES: Basically Balwin sell to Transcend and Balwin packages. So what we do is we take a typical development like Green Park in Boksburg with 1200 units and we develop it phases for phase. We do the first phase, which is 100 apartments. We build it, we tenant it and then we hand it over to them and then they effect transfer to us.
NASTASSIA ARENDSE: In a market where a lot of companies – depending on which space you are in, even the retailers – are struggling as well, looking at the economic environment and the consumers, are you seeing strong demand for the rental housing market in South Africa at the moment?
STEVE BROOKES: Extremely strong. We’ve actually had market surveys done and the market surveys are showing an incredible appetite for rental.
NASTASSIA ARENDSE: You mentioned five key developments in the Gauteng nodes. Which areas are you looking at outside of Green Park in the Boksburg area?
STEVE BROOKES: We are looking at Green Lee in the Linro Park area, Green Creek which is in Pretoria East, Green Wood, which is in Pretoria East and Green Hill, which is next to Greenstone
NASTASSIA ARENDSE: Is there scope for this to go beyond the Gauteng nodes?
STEVE BROOKES: Hundred percent. Myself and Rob Wesselo call this phase one. We are looking at 4 000 aprtments in Ballito, for which we’re negotiating on the land at the moment, and we are looking at a large amount of stock in the Western Cape, but obviously not in Cape Town and the outlying areas.
NASTASSIA ARENDSE: Because you’ve described this as phase one, between you and Rob what would be the key information that would tell you that this is starting to pick up and it’s working really well?
STEVE BROOKES: I think if the tenancy exceeds our feasibility – in other words, if we say we are going to tenant 40 year parts of the month in any given area, and we tenant more than that, then we will definitely look at more appetite.
NASTASSIA ARENDSE: All right, Steve. Thank you so much for your time.
STEVE BROOKES: Thanks very much.