IFC announced an investment to support South African residential property developer Alleyroads to build over 1,000 rental apartment units in the Johannesburg area to promote access to affordable, sustainable residential housing.
Alleyroads will benefit from an IFC loan of 325 million South African rands (about $20.2 million) to assist finance the building of the apartments, which are intended for lower-to-middle income people with an average annual wage of around ZAR238,000 ($15,000 comparable). The apartments will have two bedrooms with an average size of 62m2 and will be erected near hospitals, schools, and markets, as well as green spaces and play areas for children.
The flats will contribute to closing the housing gap in Johannesburg’s affordable housing market, which is suffering from severe scarcity, notably in the ZAR4,000 to 6,000 per month rental bracket. The project will boost economic activity by providing 860 jobs during construction and 45 jobs throughout the operation. The project is expected to be completed in 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 build-to-rent and green building spaces. The company is helping South Africa meet the 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.