South Africa, in keeping with international trends, is experiencing a shift to property rental in preference to buying. Among the factors causing this are punitive local lending regulations, resulting in only an estimated 30% of loan applicants in the affordable housing bracket obtaining bond approvals.
As a consequence, increased rental demand has put severe pressure on stocks, especially in the affordable housing and apartment accommodation sectors. Demand from primarily low and middle-income earners who do not qualify for bonds is driving prices upwards to such an extent that rentals in some cases equal bond repayments.
Yet perplexingly, South Africa lags the world in treating residential rentals as a business. Current players seem to be addressing only the tip of the demand iceberg, even though debt funding is generally available. South African property development firms typically follow a similar business model – that of build-to-sell – with the consequence that the build-to-rent industry is relatively undersubscribed.
It is against this backdrop that the Devco Platinum business model was designed to create its new real estate rental fund, one based on the international real estate investment trust (REIT) model through direct real estate investment
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