Gauteng Business News

Send  Share  RSS  Twitter  29 Feb 2012

HOUSING: Strong Pipeline for Affordable Homes Builder RBA Homes


Recent Gauteng Business News

The freer availability of bond finance from the countryÂ’s leading lending institutions has led to a surge in building activity by affordable homes builder RBA Homes, which listed on the Alt-X in 2007.

CEO, David Wentzel, estimates that the company has new housing projects to a total value of around R400m currently in progress – mainly in Gauteng and Polokwane.

This excludes the existing housing developments where RBA Homes has already been active for some time, such as Cosmo City in Randburg, Devland Gardens and Bram Fischerville in Soweto and Mpophomeni in KwaZulu Natal.

According to Wentzel, at the end of last year RBA had 325 housing packages awaiting bond approval at the banks; 379 deals approved and awaiting bond registration and 191 houses under construction.

RBA Determined to See the Finished Product

While sales activity has definitely increased, increased efficiencies have also been introduced at RBA to ensure that work in progress translates into registrations and, ultimately, completed houses in a shorter period of time.

For example, RBA had 613 “equivalent houses completed” for the 12 months ending December 2011 as opposed to 379 “equivalent houses completed” for the period ending December 2010. “Equivalent houses completed” takes into account the number of houses under construction at the beginning of the period, registrations that have taken place during the period and the number of houses under construction at the end of the period. It represents the number of “equivalent” houses actually completed during the period.

New RBA Home Developments Currently Engaged in Include:

Extension 41 and 42 in Atteridgeville, Pretoria West, where it has 110 full title stands available for development. Township services have been completed, the registration of stands into individual clientÂ’s names has commenced and construction of the first houses is under way. The total value of RBAÂ’s Atteridgeville development is estimated to be around R50m.

At Roodekop Extension 25 on the East rand, at the intersection of the N3 and Heidelberg road, RBA Homes has a total of 68 full title stands at its disposal. Once again, services have been completed, the registration of stands into individual clientÂ’s names has started and the construction of the first houses has commenced. Total value of development is some R30m

At Extension 30, Kirkney, Pretoria West, the company has 101 full title stands where services are in progress. The registration of stands into clientsÂ’ names is planned to start in April, after which construction will commence. The total value of development is around R40m.

Meanwhile, at Phase 1, of the Southern Gateway development in Polokwane the company has a further 164 full title stands available. Already 143 bond applications have been approved by various banks, the civil engineering contractors have been appointed and are due to make a start on the township services later this month. The registration of stands into clientÂ’s names is planned for September, after which construction will commence. The total value of the development is estimated at around R70m.

In addition, the company is busy with a second phase of its highly successful Protea Glen, Soweto, rental housing project. Construction of the 148 units has commenced and the development cost is R43m – R39m of which has been financed by the National Housing Finance Corporation who were the funders on the original 176-unit, phase one, Protea Glen rental housing project. With rentals for phase 2 expected to average R3 800 per month and operating costs of around R800 per unit, the net yield on the 148-unit development is estimated to be 11%.

The company is also currently busy securing funding for the development of 540 rental units to be developed in phases in Roodekop Extension 33. The development cost is estimated at R170m.

Wentzel says the company is aiming to have between 900 and 1 000 homes registered during 2012, which will take to company to a level of building activity last enjoyed in 2007.

“Indications are that the banks’ lending to this sector of the residential property market will continue to improve. That, coupled with an improvement in our clients’ disposable income levels, is likely to result in a continued improvement in our monthly sales. RBA Home is thus well positioned to take advantage of any uptick in demand in the affordable housing sector,” he says.

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