Investment worthiness is the ideal

WHILE many township residents would like to rent or own property in other traditional suburbs, some choose to remain in their own areas.

The impressive township property price growth is one factor, but another is that infrastructure upgrades are making these areas more attractive.

Some township areas are still in dire need of infrastructure development, but those in which strides have already been made are showing promise for their residents.

Kecia Rust, executive director and founder of the Centre for Affordable Housing Finance in Africa (CAHF), says some neighbourhoods have seen “considerable investment” and this has had a “demonstrable impact” on the local property markets.

“The most obvious is the investments made around the World Cup in 2010 into the development of public parks and improvement of roads infrastructure in some townships. More recently, however, infrastructure investment into roads and kerbs, stormwater drainage, lighting and so on all contribute towards a sense of ‘investment worthiness’ where households feel they can commit to investing their own money. This is relevant for low-income township areas as much as it is for higher income areas.”

Making township neighbourhoods investment grade is a critical issue, Rust says, and in a CAHF document there is a proposal for area-based “green lining”, which she defines as “a partnership between local municipalities and lenders in which specific areas are targeted for efforts to make them ‘investment grade’ for households and lenders alike”.

This partnership would see municipalities committing to an increased focus on the collection of rates and services payments, by-law enforcement, expedited municipal approvals, and area-based improvement initiatives.

“Lenders would commit to a targeted lending programme for qualifying borrowers in these areas, greater local presence, and accessible community education initiatives,” Rust says.

This will positively affect the local areas and their property markets and improve social conditions. Berry Everitt, chief executive of the Chas Everitt International property group, says international research has shown home ownership brings about social benefits such as better health and education, lower crimes rates and stronger communities.

“This is especially the case in rapidly urbanising situations. There are many places to observe this in action, including inner-city areas where run-down factories and office blocks have been converted to trendy apartments and workspaces, and where regeneration has led to social revival.”

In many township areas where long-term residents received title deeds, they have been able to borrow against their properties or sell and upgrade.

PICTURE: KIM STONE ATTRACTING MONEY Making township neighbourhoods investment grade is a critical issue that must be addressed.