fund to finance low-income housing
18 June 2007

International Housing Solutions (IHS), the joint venture between the US's MuniMae and Irish property group Eurocape, aimed to finance the construction of homes for households earning between R2 500 and R7 500 a month, Elize Stroebel, the director of IHS, said last week.

Stroebel said IHS had recently won a bid from the US Overseas Private Investment Corporation to create a $300 million (R2 billion) leveraged fund to finance affordable housing projects in South Africa and Jordan. Up to $225 million from this fund, coupled with project-based debt, would be made available to finance more than $1 billion worth of housing development.

South African property developers now had a new source of finance to help overcome the historic difficulties they had faced in obtaining cost-efficient funding to build homes that were affordable for the majority of South Africans, Stroebel said.

This income bracket is often described as the "missing middle'', as families within this income range earn too much to qualify for government-funded housing, but also find that adequate housing is too expensive, either for purchase or rent.

Stroebel said that countries such as the US and UK had bridged this gap by involving equity investors as part of the solution "and this is what we will be doing in South Africa". "We are committing our own capital, as well as that of international investors like the US Overseas Private Investment Corporation, to help finance affordable housing projects", she said.

 
Prince Moeng, www.busrep.co.za