Balwin Properties to tap JSE for business

South Africa's residential sector is to be represented again on the JSE’s main board, with a home-builder focusing on large scale sectional-title estates — this time from Balwin Properties which intents to list mid-October.

The company plans to raise about R1.5 billion selling shares on the Johannesburg Stock Exchange to capitalize on growing demand for residential property.

A successful listing, will bring the JSE’s tally of new real estate listings over the past 18 months to 11. There have been three new property listings so far this year: UK-focused mall owner New Frontier Properties; SA-based Lodestone; and Arrowhead spin-off IndluPlace Properties, the JSE’s first pure housing fund.

Since establishment in 1996, Balwin has developed and sold over 70 residential estates comprising some 13,500 residential units, the bulk of which were delivered since large scale operations began in 2005.

“Listing on the JSE will grant us access to the capital markets and enhance our profile,” CEO Stephen Brookes said in an e-mailed statement on Tuesday.

“The demand for new smaller-sized, higher density apartments and townhouses remains robust, accounting for more than 70% of new housing built in South Africa over the past 20 years. This trend is in line with similar emerging economies and is driven by factors such as urbanisation, growing population and growing middle class, land scarcity, building costs, housing affordability, property costs such as rates, taxes and levies, safety concerns with stand alone housing, as well as lifestyle changes, especially in the metropolitan areas of the country,” Brookes said.

Balwin has a secured project pipeline of approximately 8 years which, together with continually identified land acquisitions is expected to drive future growth. The Company is also currently negotiating the acquisition of an additional land parcel in the Kyalami node, on which a further ±15,000 sectional-title residential units may be developed.

Balwin is currently owned 70% by management and 30% by its private equity partner, Buffet Investments.

Other residential-focused listings include Visual International and Freedom Property Fund. Unlike IndluPlace, which is predominantly an income play, Visual International and Freedom are capital growth plays.

The Balwin listing will offer a dividend, albeit at a relatively low yield of between 3.5% and 4% versus the average 6.5% from income-paying property stocks. Balwin plans to build a sizeable rental portfolio of R2bn-R3bn by 2020, in addition to its build-to-sell model.