The Gauteng Partnership Fund has partnered equally with the National Housing Finance Corporation on a R200 million Entrepreneur Empowerment Property Fund programme aimed at companies pursuing rental housing opportunities in Gauteng.

The Gauteng Partnership Fund (GPF) and National Housing Finance Corporation (NHFC) entered into this co-funding agreement in June 2012. TheEntrepreneur Empowerment Property Fund(EEPF) is an incubator programme designed to promote participation of black entrepreneurs in the affordable rental property market.

The EEPF programme was initiated as an intervention for the affordable housing market. Black property entrepreneurs have, to date, experienced a myriad number of constraints in entering this market. “The partnership provides a funding solution to bridge the capital gap experienced by these property entrepreneurs,” explains GPF CEO, Kutoane Kutoane.

He adds that the global financial woes have unabatedly continued to pound on the confidence of the banks to increase their quantum of funding in the low end of the housing market, and also to frustrate their programmes. Nevertheless, he says: “We have shown great resilience and innovative design capabilities in our funding models.”

In its efforts to promote the sustainable entry of BEE participants in ownership of medium density property in the inner cities, the NHFC has partnered with the GPF to enable the radical transformation of the affordable rental property market, states Samson Moraba, CEO of the NHFC.

GPF’s chief investment officer, BoniMuvevistates that these participants are selected through a public call and vigorous selection process on an annual basis.

He says that this partnership will ensure that EEPF projects will have up to 95% project funding available.

The GPF mandate has evolved over the years in line with the evolving provincial government housing objectives. In doing so, the GPF has extended its funding facilitation reach to cover the wider affordable rental housing market. It is estimated that 25% of households in South Africa have no access to housing due to affordability challenges. These will be households that earn above the government housing subsidy threshold, while at the same time not qualifying for bank mortgages due to the perceived high risk and low credit rating. The assumption will be that the percentage could be much higher in Gauteng.

GPF launched EEPF in 2010. After a public proposal call was made, prospective entrepreneurs are short-listed and put through a rigorous induction programme that covers aspects such as property, facilities and resources management. Once a project is approved, a dedicated GPF programme manager will be available to assist with any challenges. The first proposal call yielded 11 successful participants, of whom 8 have secured projects after their proposals were approved.

In total, the Board of Trustees of the GPF has approved R100 million for the EEPF facility and another R100 million from the NHFC as part of the co-funding agreement. Additional funding will be considered depending on the programme’s success.

In line with the provincial government objective of delivering 20 000 rental accommodation units by the 2014, GPF has committed in its current strategy to the objective of facilitating funding for 6 000 of those units.

This calls for over R1.4 billion in funding resources, of which the government will need to contribute about R470 million.

With the new partnership between GPF and NHFC, as well as the benefit of experience, the provision of affordable accommodation makes economic sense and is therefore a good investment for entrepreneurs.

The GPF celebrates its 10th anniversary this year after having been established by the Gauteng Department of Housing and Local Government to address specific challenges in the social housing sector in terms of ‘affordable rental’. The GPF targets households with a monthly income of less than R15 000 (CPI-linked). Ensuring banks make a commitment to affordable housing finance was a key deliverable when the GPF was established. The GPF has created a risk-sharing facilities with Absa and Standard Bank with a value of over R340 million of the banks’ commitment to affordable housing projects.

Projects the GPF has been involved in include:

Manners Mansion, which is located in the Johannesburg CBD. The project entailed the acquisition and refurbishment of Manners Mansion Building. The building comprises a 13-storey building and has a combination of 80 residential units averaging 60 m² and nine retail tenants at the ground floor.

The Hlanganani project, located in the mixed use Cosmo City development. The Hlanganani project consists of 281 units in 21 blocks of two and three storey walk up townhouse type units with open parking bays. The entire development is fenced with a central security controlled entrance for vehicles and pedestrians. The Hlanganani project has a mix of one-bedroom, two-bedroom and three-bedroom units.

More recently it has been involved in the Jabulani Views development, which is part of the larger Jabulani CBD development consisting of an amphitheatre, retail centre and commercial/office development. The proposed development is part of a greater development plan for the greater Soweto area. The development will consist of 140 units of 30 m² each (one bedroom) and 160 units of 40 m² each (2 bedroom).

Other projects include:

Pharoe Park project in Germiston, Phase 2b in Germiston comprising 808 stands in Germiston and 948 in Delville; Brickfields in the Johannesburg CBD comprising 809 mixed use units; Kliptown in Soweto comprising 1 410 units; HarmonieHof in Hillbrow comprising 70 units,; a project in Roodepoort CBD comprising 432 two storey walk-up units; Tau Village in Pretoria comprising 109 two storey walk-up housing units; Olievenhoutbosch in Pretoria, which consists of 70 units; and the Ridge Hotel in Berea comprising four properties: the 14 storey main hotel building, the four-storey hotel extension, a two-storey building and KwaNgombe, a three-storey stand-alone building.