Balwin Properties, an owned subsidiary of JSE-listed Balwin, is expanding its rental portfolio to develop up to 7 300 apartments for rental, a project that could create some 39 000 direct and indirect job opportunities over eight to 10 years
For Balwin, the addition of a more defensive asset class diversifies its revenue streams and grows annuity income to complement the cyclical nature of its build-to-sell development business. Moreover, the group will benefit from improved use of its unused land portfolio.
Preliminary studies showed the rollout of the rental portfolio would over time create about 39 000 direct and indirect job opportunities. Balwin Rentals planned to raise long-term debt finance from commercial lending and development finance institutions at preferential interest rates, to fund the development, a statement from the group said.
Balwin develops middle to upper income lifestyle apartment estates, but at the time of its listing, it had envisaged the development and management of a separate rental portfolio to complement the core business.
Over the past few years, Balwin said it had built the capacity, technology and systems to roll out a scalable and efficient rental portfolio, without detracting from its build-to-sell model of about 2 000 to 3 000 sectional title apartments a year, with the ability to scale up if demand warrants.
The group intended to also leverage its brand and position the rental portfolio as an incubation hub to transition qualifying tenants to purchasing Balwin apartments.
The rental apartments/estates would maintain the EDGE Advanced certification that was provided with Balwin’s build-to-sell model. The rental estates would be developed solely for rental, and none would be available for sale in the open market.
Existing land parcels owned by the group had been identified for the first six build-to-rent developments. This represented about 20% of the company’s current unused land portfolio. The land identified for the rental model was in Johannesburg east, Tshwane east and the Western Cape.
Balwin Rentals would have full control over the rental estates, allowing the optimal management of costs. Management of the rental portfolio would be internalised as far as possible.
The rental portfolio would target market rentals of between R6000 and R13 000 per month for one-, two- and three-bedroom apartments, while retaining quality and certain lifestyle elements such as solar, high-speed fibre connectivity and facial recognition access control.