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Posted: 2 Jun 2016

Bridging the housing gap in South Africa

Old Mutual holds the view that Responsible Investment is fundamental to economic transformation. The term refers to those investments that provide investors with commercial returns while delivering positive social and developmental impacts on scale.

In 2012 there were 50 million people in South Africa and 3 million of these were families living in single room homes. In 2016, the “housing gap” in South Africa remains one of the country’s greatest challenges in terms of economic transformation. An alarming number of the country’s citizens fall outside the qualifying parameters for government subsidised housing, yet are unable to afford their own homes.

As part of our Responsible Investment initiatives, we place significant emphasis on investing in assets or areas where gaps or backlogs in social infrastructure have not been adequately addressed.

The Housing Impact Fund for South Africa (HIFSA), which is managed by the Development Impact Funds (DIF) team within the Alternative Investments capability of Old Mutual Investment Group, is specifically aimed at bridging the housing gap through investments in housing and housing-related assets within South Africa.

HIFSA is 100% invested in South Africa with a minimum of 80% to be invested in housing and housing-related assets, of which at least 60% is invested for the benefit of households with incomes of less than R17 600 pm, while the remainder may be invested at household income levels less than R30 000 pm. Furthermore, of the 80% invested in housing-related assets, 67.5% is invested in greenfield development and rental stock while 32.5% is invested in end-user finance for the purposes of affordable housing.

The fund management team uses an active asset management approach in the selection, acquisition and origination of low-income housing-related assets. Investments are structured as long-term strategic partnerships with carefully selected counterparties in order to achieve large-scale impact with positive developmental outcomes.

HIFSA is currently the largest single source of development funding in the affordable market, having provided more money than South Africa's big four commercial banks combined since 2010.

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