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Impact-driven property finance company TUHF21 has announced the finalisation of uMaStandi Fund, its first funding vehicle aimed at financing rental properties in townships. uMaStandi has attracted R125m from new sources in its first year of operations. The facility will be used to continue backing property developers providing affordable rental accommodation.

Funders include Nedbank, the Nedbank Black Business Partners Legacy Trust, (which includes Old Mutual’s participation), the SA SME Fund, Novo Impact Fund NPC, Apex-Hi Charitable Trust and Oppenheimer Generations Foundation.

“We are proud that we were able to attract a mixture of funding partners, including a commercial bank and some innovative impact funders. It is especially important to acknowledge that we secured this support because of the catalytic funding provided by Oppenheimer Generations Foundation,” says Lusanda Netshitenzhe, CEO of TUHF21.

“These partnerships will be key to building on the momentum we have created during the past year as we move forward in 2023. For a developing country like South Africa, uMaStandi provides an innovative way for township developers to grow and deliver compelling value for property owners to diversify their portfolios while offering quality, affordable housing.”

The uMaStandi facility uses ownership of property as equity to gear a rental enterprise where owners can build quality affordable rental units on their land. It also ensures that construction is properly managed and has all the necessary planning permissions in place.

High-quality investors

“When we approached funders to support our vision for township developments, we were initially apprehensive – but then pleasantly surprised by the high quality of investors who took the opportunity, their level of interest and their willingness to commit to township funding,” says Netshitenzhe.

Because of the sprawl and low densities in townships – a result of the ineffective use of space in the past – there are many opportunities for densification and bringing in mixed-use developments. This kind of development could stimulate township economies, create places of employment, and offer people access to economic opportunity.

Soweto strongest development market

“Our first draw has resulted in the acquisition of R40m worth of assets spread across 36 loans. By the end of 2023, we aim to achieve R100m worth of loans issued by uMaStandi. The demand is there, and we are seeing the need to mature beyond small-scale developers to mid-size developers,” says Netshitenzhe.

“Our observation has been that Soweto is still the strongest market for development, however, our new operation in Durban is picking up far quicker than expected, with Cape Town and East London also remaining key growth markets,” she concludes.

Some people seem to be destined to find solutions to common problems. That was certainly the case for Bulali Mdontsane, whose path led him to becoming the developer, aided by uMaStandi, of Singleton Heights, located at 17 Casper Street in Protea Glen.

Originally from the Eastern Cape, Bulali began his career obtaining a degree in engineering with a focus on chemical engineering. He then obtained a Pr-Tech Engineer designation with the Engineering Council of South Africa and secured a master’s in engineering management at UJ. His forays in academia continued yet again, more recently, by earning an MBA from Wits University.

However, instead of ending up in engineering, Bulali’s passion led him to expanding his passions into becoming a property entrepreneur. “I consider myself an African child, and I saw all these various problems, one of which was the issue of human settlements,” he explains. Together with uMaStandi, Bulali is now doing his part to address the need for safe, comfortable accommodation in the townships.

”The Singleton Heights project is particularly significant to me. The building is a tribute to my uncle, who was a migrant worker working in the mines and had to endure living in hot, unpleasant conditions,” he continues.

The main aim of the Singleton Heights development is to provide clean, comfortable accommodation for people who are working in Johannesburg but who originally hail from far away.

“It is for people who move out of the homes they grew up in and they don’t want the back-room type of space; they want a safe space where they can park their cars, but they also like the communal lifestyle of the township,” he explains.

The double story property consists of 30 bachelor apartments that are 25 square metres in size, and each have their own dedicated parking bay. They are designed to be lock-up-and-go accommodation, 29 of the thirty are let, and the remaining one is for a live-in caretaker.

On the cards for the near future is a laundromat, and Bulali is also considering adding a space out of which precooked and hot food could be sold. Both would create entrepreneurial opportunities for other small businesses in the community.

“Ï was brought up with the philosophy of Ubuntu, which I still believe in, and with these plans, I believe there would be shared value. Lift as You rise, I would garner greater value as the landlord, my tenants would have greater convenience, and the entrepreneurs involved would be able to share the market. The aim is to uplift the community together,” he enthuses.

Bulali explains that for the most part the development of the apartment block proceeded smoothly, with construction beginning in February 2022, and finishing in July. After final inspections were completed in August, the apartments were ready to be let. A notable achievement of the project is that it was completed two months ahead of schedule.

Singleton Heights is not Bulali’s first foray into property development and ownership, but it is his most ambitious to date, which is why he turned to uMaStandi. Previously, he acted as the project manager on his first two developments, sourcing the required contractors on his own. Those developments were smaller in scope involving the conversion and extension of existing structures, and consisting of six units in Durban and in Soweto, respectively.

Bulali’s comprehensive academic background served him well, with his engineering experience helping him manage the various puzzle pieces that go into successful development, while the MBA helped him with the management and financial aspects. But, he explains, working with uMaStandi has helped him manage his property portfolio in a more professional manner as well as avoid some of the major traps and pitfalls involved in an owner-run development.

No project is without its challenges, and Bulali had to contend with two major ones. The first was dealing with the inefficiencies of the municipality and utilities, which he acknowledges he underestimated. This slowed the process at times.

The second was the ‘construction mafia’ – third parties who demanded 30% stake in the project. This challenge he had accounted for, he relates, having ensured that his construction team was locally sourced. Bulali also ensured that he communicated extensively with the local councillor and with the local community ahead of time, which forestalled individuals’ attempts to hijack the project for their own gain.

“I learnt that rule number one is to always obtain community involvement before bringing development into the area,” he relates.

His advice for anyone who wanted to get into property development is to bear in mind that every phase of this business is about people; from aligning with the neighbours, ensuring you have buy-in from political leaders and the community, being able to connect with people is essential. Bulali also stresses the importance of looking beyond one’s own financial gain, a value which aligns him with uMaStandi’s purpose.

“I think as developers we have a role to play in changing the face of the spaces that we walk across and addressing the housing problem in South Africa. And for me, my chosen space is the township and I do believe that my mission and what TUHF does through uMaStandi, is linked. No one is coming to save us. People need safe living spaces and I think we can be the solution we are waiting for,” says Bulali.

For Jade Barkhuysen, his journey into property development began ten years ago, when he purchased his first property in his hometown of Gqeberha and began building his property portfolio .

Bayside Lodge, located at 59- Green Street, North End in Gqeberha, is another first for him: it is the  first project he has undertaken with the aid of TUHF.

Until now, Jade has learned the ins and outs of property investing brokering primarily through self-study, through books, seminars, and coaches who showed him how to find good deals that he could renovate and sell for a profit or keep as an income generating asset.  But Bayside Lodge is different, he explains, as it speaks to his passion for providing clean, affordable accommodation in the inner city of Gqeberha.

Bayside Lodge also stands out as Jade’s first redevelopment of a property of this size, which is why he turned to TUHF for assistance.

Jade and his team took on the challenge of refurbishing this brownfields project and converted   the old commune with 19 bedrooms into 17 efficient studio apartments (which range from 14 to 25 square metres), each with its own bathroom (with shower, basin and toilet) and kitchenette.

‘’The most important thing for property investors in Nelson Mandela Bay is to be able to efficiently manage their electricity and water expenditures, in lieu of ongoing loadshedding in the country and the persistent water shortages in the Nelson Mandela Bay area. The pricing for water in particular has skyrocketed, which has derailed many a property investor who didn’t account for it in their plans,” he explains.

The solution for Bayside Lodge was to ensure tenants had their own prepaid electricity and water meters and could be individually accountable for the utilities they use.

The property includes a communal laundry facility which is open to all the residents – who are primarily young professionals between the ages of 21 and 35. Providing fibre connectivity was more of a challenge, as fibre isn’t yet available in the area. However, Jade is currently looking at how connectivity can be offered through another option.

What Bayside Lodge does have is its own borehole, which is particularly important given the water shortages in the area. “‘If there’s ever a problem with either the municipal or borehole supply, we can always switch between the two. I think that does give this property an important advantage because the tenants know that they’re always going to have water,” he notes.

While the water from the borehole is regularly tested at a lab, and approved as being safe for cooking and washing, and even consumption, it is further safeguarded by a comprehensive filtration system as well. Additionally, in response to the critically low water levels in the area, all the taps and showerheads in the bathrooms have low-flow fittings. Solar power is also on the cards for the development within the next six to 12-months once it is fully leased and generating the requisite cash flow.

Almost every commercial project has some challenges, and according to Jade, Bayside Lodge had to face a significant one. Even though the land already had approved blueprints from the 1920s, it took three rejections for the new building plans to be accepted. The approvals procedure caused two-week delays between each resubmission, which had an influence on acquiring finance.

“That was quite a nerve-wracking stage, because I needed the building plans to be approved before I could actually get the financing,” he explains.

Those delays ultimately lead to Jade having to take a leap of faith, buying the property himself for cash to prevent it from being relisted on the market and then refinancing it with TUHF.

‘’A key takeaway from this development is that it really is a collaborative team effort. As a developer, while you need to bring everything together, you don’t have the individual skills to do everything yourself. ,  It is essential to have the support of a competent team of professionals and an organization like TUHF,’’ he stresses.

For other aspiring new-fledged property developers, Jade advises finding the right deals in areas in in-city and inner city areas where TUHF finances, and then approaching them to work together.

“Personally, I intend to continue following my passion for investing in the inner-city, because there’s a unique fulfilment that comes from creating an environment where people can feel safe and live well,’’ Jade concludes.

“I’m very happy that TUHF is a part of my team. They are unlike your normal banks – they see the potential.” Lazola Kubukeli talks about his second project with TUHF to refurbish Grace Villas in East London.

“TUHF epitomises the development finance principles, because they have a unique understanding for this market.” Ayanda Gqoboka talks about his journey with TUHF to refurbish 3 Dunrobyn Court into a mixed-use property offering affordable rental housing to young professionals in East London.