Johannesburg, South Africa, July 13, 2022—To improve access to affordable, sustainable residential housing in South Africa, IFC today announced an investment to support South African residential property developer, Alleyroads, to build over 1,000 rental apartment units in the Johannesburg area.
IFC's 325 million South African rand (about $20.2 million) loan to Alleyroads will help the company finance construction of the apartments, which are aimed at lower-to-middle income households with an average annual salary of about ZAR238,000 ($15,000 equivalent). The apartments will consist of two bedrooms with an average size of 62m², and will be built near hospitals, schools, markets, and will provide green spaces and play areas for children.
The apartments will help reduce the housing gap in Johannesburg's affordable housing market, which faces a significant shortage, particularly in the ZAR4,000 to 6,000 per month rental segment. The project will support economic activity by creating 860 jobs during the construction phase, and 45 jobs during the operating phase. Project completion is scheduled for 2023.
"The Group is extremely thankful to IFC for having the confidence in our ability to deliver these much needed housing units to this sector of the residential market. The team is ready to roll up their sleeves and ensure the timely delivery of excellent quality units," said Ivan Pretorius, Managing Director of the Alleyroads Group.
"Affordable rental housing is essential for improving quality of life in South Africa, particularly for younger people and those that do not qualify for or cannot afford a mortgage. IFC's investment in Alleyroads will improve access to good-quality, affordable residential housing in South Africa, which is positively linked to social benefits like better education and health outcomes," said Adamou Labara, IFC Country Manager for South Africa.
The apartments will be designed to meet IFC's EDGE Advanced green building standards, which makes them zero carbon ready and among the first residential units to achieve such a high resource efficiency in sub-Saharan Africa. Alleyroads will install on-site solar panels to supply about 30 percent of the development's energy needs.
Since its establishment in 2009, Alleyroads has grown to become a leading affordable housing developer in the build-to-rent and green building spaces. The company is helping South Africa meet rising demand for affordable rental housing, which is driven by population growth and rapid urbanization.
"The transaction represents a significant milestone in the evolution of the Alleyroads Group and signals the intention of the company to be one of the pre-eminent leaders in the affordable residential housing market. We look forward to a continued partnership with Alleyroads and IFC", said Mesh Pillay, Chief Executive of YW Capital, exclusive advisor to Alleyroads.
Alleyroads is a locally owned level 2 black economic empowerment (BEE) company. IFC is committed to supporting the government of South Africa's economic transformation agenda and increasing the economic participation of historically disadvantaged citizens.
As part of its support to South Africa's housing market, IFC is working with partners in the country to improve access to affordable housing and student accommodation.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
About Alleyroads
Alleyroads is one of the largest black owned affordable Housing Developer in South Africa and operates and/or have interests in all nine provinces. Roughly 60% of the rental portfolio is in Gauteng, followed by 30% in Kwa-Zulu Natal, and the balance in Mpumalanga, Limpopo, North West and the remaining provinces. Alleyroads is an established property development company specializing in Sales & Marketing, Rental & Estate Management, solar energy solutions and Electronic Metering Services. We also offer professional and systemized administration service, including maintenance assistance via our dedicated service provider. For more information, visit http://alleyroads.co.za/
