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Nthabiseng Masithela is an electrician by profession, owns a construction business, and became a property entrepreneur in 2019. Seeking to expand her portfolio, she worked with TUHF and the Intuthuko Equity Fund to buy Fatima Court in Rosettenville, Johannesburg, in August 2020.

“Construction is about creating beautiful properties for other people, and I realised that I wanted to do this for myself,” Nthabiseng says. “This property is an opportunity to do that, as my company will be doing the construction work needed to give Fatima Court a new lease on life.”

When Nthabiseng realised she wanted to become a property entrepreneur, she began looking for opportunities to learn about property as a business. “I came across TUHF through Henry Chitsulo in 2019,” she says. “I was speaking to him on site one day and told him I was looking to expand my property portfolio. That’s when he mentioned that he consults to TUHF and is one of the mentors on TUHF’s TPPE training programme. He told me about the programme, and that TUHF would be opening it up to non-clients that year, so I was able to attend with a few of my friends.”

“The TPPE really helped me understand more about the industry and how it works,” she says. “As entrepreneurs we often tend to jump in, and the TPPE shows you how to do it in a structured and professional way. It also helped me understand the market better and which areas make sense to invest in if you want to create affordable housing.”

The TPPE made such an impression on Nthabiseng that she often nominates aspiring entrepreneurs to attend. “I was inspired and excited, and I wanted to get my first project going as soon as possible,” she says.

She worked with TUHF and the Intuthuko Equity Fund (IEF) – a unique inner-city property finance initiative for property entrepreneurs who face constraints in accessing equity finance – to conduct a feasibility study and acquire Fatima Court.

“It’s easy to go out there, find the property and do the numbers,” she says, “but it’s not always the case that one has the money for the equity contribution. That’s where Intuthuko really helped. They funded the portion of the equity that I didn’t have on hand – about 10% – while TUHF extended the loan to purchase the property.”

The building needs renovations, which Nthabiseng intends to start in July 2020. The mixed-use building has four commercial units on the ground floor, while the three flats on the top floor will be divided up to form seven residential units aimed at young professionals or start-up families.

“The final configuration will be four bachelor studios and three one-bed units,” Nthabiseng says. “We’re hoping to complete the renovations in three months.”

“We came across the property [Elvon Court] in July 2020, just after the hard lockdown began to lift, through a real estate agent with whom we had built a relationship. We liked the building, but because of the uncer­tainty brought about by the pan­demic, we held off on purchasing it until September.”

Msizi describes the property’s state at the time as extremely neglected. “For example, it had wooden floors that hadn’t been maintained well, there were broken windows and the bathrooms weren’t in great shape. Its occupancy level was low – about 10 out of the 21 units had tenants,” he says. “But we believed that the property had great potential, even though it has been undermanaged in the past.”

Playing the long game

Msizi’s journey is an interesting and inspiring one. Raised by a single mother in Pietermaritzburg, he orig­inally attended a township school until he earned an academic scholar­ship to attend Maritzburg College. “I learned about KPIs very early in my life,” he laughs. He was later award­ed a bursary from one of the state-owned entities to study towards an electronic engineering degree at the University of KwaZulu-Natal, and later joined an engineering firm upon completing his degree. He quickly realised engineering wasn’t a fit for him and moved into management consulting before progressing to investment banking. He and his busi­ness partners – who are both practic­ing engineers – intend to become full time property entrepreneurs.

Msizi’s journey towards full-time property entrepreneurship began in 2014. “I came across TUHF when we started looking for our first property asset. We were specifically interested in the inner-city, where we knew we could expect better yields and high occupancy rates,” Msizi says. “I found TUHF through an internet search, and then reached out to my network who put me in touch with people at TUHF.”

It took some time and perseverance to find the right property. “This project is our sixth-time lucky,” Msizi points out. “We’ve walked a journey with TUHF, where we’ve brought properties to them that we thought would make good investments and they’ve advised about the feasibil­ity or appropriate pricing for the purchase, and we’ve ended up not going through with those deals for one reason or another. But our ex­perience was always very supportive and collaborative. TUHF was always keen to keep on looking and to let us know if they came across appropriate opportunities through their network. Our experience with TUHF is one of ‘partnership’ in a very true sense of the word.”

The equity built up through the stokvel enabled Msizi and his part­ners to apply for a loan with TUHF to purchase Elvon Court, but needed to be supplemented to make up the full equity contribution required by TUHF. The shortfall was funded through the Intuthuko Equity Fund, and the dream to own and manage a portfolio of property assets met its first milestone. The Intuthuko Equity Fund is managed by TUHF21, with funding from The Jobs Fund. IEF’s objective is to finance the equity portion of a TUHF loan for PDIs who may not otherwise have access to the required equity.

The existing units were refurbished and updated in three months, with repairs done to the damaged win­dows as well as new bathrooms, new floors, and a fresh coat of paint. The building is a combination of 1 and 2 bedroom units, with bachelor studios on the top floor. It was 80% tenant­ed in May 2021.

Msizi’s advice to other aspiring property entrepreneurs is to take their time building up their capital and finding the right asset. “That’s actually one of the great value-adds of working with TUHF,” he says. “They bring in-depth market knowl­edge, a sharp commercial lens as well as a deep understanding of property management that really enriches you as an entrepreneur as well as the deal.”

“The other piece of advice I must give is to be ambitious in your thinking,” he adds. “Your dreams must be wor­thy of your pursuits. So, start small and get to know the business and the industry, but keep your dreams and ambitions big.”

For over 50 years, the United Cerebral Palsy Association of South Africa (UCPASA) has cared for the needs of Cerebral Palsy patients in Gauteng, and beyond. The organisation’s reputation as a caring, efficient and profes­sional institution is irrefutable.

The UCPASA has clearly defined objectives, and the res­idents in their care are their foremost and only concern. Unfortunately, the organisation was significantly affect­ed by the COVID-19 pandemic as no one who wasn’t employed by the Home could enter the premises during Lockdown.

Funders and volunteers were unable to visit the home, putting enormous pressure on the small team of employees to care for residents. To make matters worse, many long-time supporters had to stop their donations – individuals and companies – as they came under their own economic pressure resulting from the pandemic.

“We were able to visit the UCPASA premises before Level 5 lockdown was implemented, and it was heart-breaking to see the organisation working so hard to provide the degree of care their wards require despite their economic challenges,” says Katherine Cox, Research, Development & Innovation Manager at TUHF.

“It was clear that, if the UCPASA could not take care of those children, their situation would be dire indeed. It was also plainly evident that the different ‘facets’ of the charitable association – all of which rely on charitable do­nations for funding – are many and varied, and we simply had to offer our support,” Katherine adds.

TUHF donated R 100 000 to the UCPASA. “The refurbish­ment of the children’s sensory room and residential block closely aligned with TUHF’s CSI Policy,” Cox says. “The UCPASA also occupies and maintains a significant land parcel towards the south of Turffontein, which is an area TUHF currently invests in, and which has potential for increased affordable residential development and invest­ment. The land is used for the children and is maintained to a high standard.”

The property market in South Africa took an enormous knock when President Ramaphosa implemented a hard lockdown to slow the spread of COVID-19 in March 2020. Property entrepreneurs working with uMaStandi in townships around the country were not immune to the impact. But, with uMaStandi’s personal and hands-on support many were able to weather the storm. Two of our clients share their experience.

Athie Mathinise, whose second uMaStandi-funded development was 60% complete when the lockdown was announced, says: “I was starting to do marketing to get tenants in for occupation by 1 July 2020 when the announcement was made, and of course everything came to a sudden stop.”

“It was really difficult. First, the contractors couldn’t come on to the site to keep building. Then, there were delays in getting building supplies because both imports and local manufacturing were stopped. This also affected the prices as everything became very expensive. And, on top of all that, we had a lot of materials being stolen from the site because no one was allowed to be there to keep it secure. 

“I also paid my contractor in advance when we heard lockdown was likely, thinking that I could help to keep him and his employees paid over the period, and that shot me in the foot. When we were able to start building again the contractor no longer had the funds to continue with the project.” 

Athie found himself in an awkward position, to say the least, and took a personal loan to start buying the materials and finishings that were needed to complete the build, such as doors and toilets. But the loan’s interest rate was extremely high, and it added a lot of stress to an already challenging situation.

He then spoke to his portfolio manager at uMaStandi, who jumped into action immediately. “Nomfundo offered great support in finding cheaper contractors and materials and came with me to site visits to inspect the work and make sure everything was on track and to the right standard. uMaStandi also helped me to safeguard the materials on site,” Athie says.

“But,” he continues, “even more importantly they helped me to stay motivated. There was a time I felt like I had made mistakes and had to give up on the project, but the team at uMaStandi were very encouraging and helped me to keep going when I felt that way.”

Athie’s other, smaller property is also funded by uMaStandi, and was also affected by the hard lockdown. “Most of the tenants in that property were employed in hospitality, and of course that was one of the worst affected industries at the time. So, when they lost their jobs they couldn’t pay rent and I knew I had to do something to help them through such a tough time,” he says.

“How you treat tenants is very important. I worked with each of them to make a plan to pay what they could until they were back on their feet and uMaStandi supported that by renegotiating my loan payment terms as well, so that I could help them,” he concludes.

Both Atthie’s properties have recovered well – they are fully tenanted and collecting rent so that his repayments are also back on track.

Shumani Pharamela, another uMaStandi client, had just started building on his first project in Protea Glen, Soweto, when the lockdown was announced. All the Quantity Surveying and costing had been done, but the price increases in materials due to the lockdown threw all that work off course. “Prices increased by 10-15% on most of the materials we needed, and steel went up by as much as 30%,” he says. “So, we had to replan everything.”

Shumani says the uMaStandi team and his contractors were very proactive, working with him every day to look for opportunities to cut back or renegotiate prices. “Because we buy a lot of materials from local hardware stores and wholesalers, who either couldn’t get stock or had to increase their prices too much to come close to our budget, we were forced to go to the manufacturers for some materials to try to offset the increases,” he says.

“uMastandi extended my grace period by a few months to accommodate the delay in construction caused by the lockdown, and that really helped. 

“We also had delays in delivery of the materials when the manufacturers and suppliers started to come back to work, as bigger projects and contractors took precedence,” he continues. “This had a knock-on effect to getting the construction going after lockdown lifted. The uMaStandi team and the project managers were very helpful and proactive in terms of planning for this and mitigating against it. They proactively advised me to apply for an increase on my loan, for example, knowing that the cost of materials would remain higher than we had planned.”

“We finally started building in June 2020 and the project is now complete and ready for tenanting,” Shumani concludes.

Both Athie and Shumani are extremely happy with the support they received from uMaStandi during such a difficult time, and are looking forward to expanding the property portfolios.

_{Below are images of Athi Matinise’s property, Brahms Court}

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_{Below are images of Shumani Pharamela’s property, Lutendo Heights}

TUHF Western Cape regional team. From left to right;

Nomfundo Molemohi, DIU Portfolio Manager, Sanet Badenhorst, Operations Administrator, Anne Meiring, Credit Analyst, Paul Nel, Portfolio Manager, Dihedile Mphachoe, Portfolio Manager, Londeka Dlamuka, uMaStandi Operations Administrator, Khulasande Naku, Operations Co-ordinator

The TUHF Western Cape regional team believes that even though COVID has had an impact on the property market, there are still significant opportunities for savvy investors looking to enter the affordable residential sector as new areas for development become available.

Even though the residential property sector in the Western Cape has not been spared by the impacts the pandemic, it has shown a higher level of resilience when compared with other nodes in South Africa. This can partly be attributed to the region’s ability to recover quicker and provide buyers and tenants with a solid selection of affordable units, says the TUHF Western Cape regional team who maintain there are still significant opportunities to be had for investors.

“Historically, the residential bubble in Cape Town has been well-documented. The areas of demand have been guided by the tourism industry and the international travel and work sector. Our focus area, the Voortrekker Corridor, was growing significantly leading up to pandemic last year. This was driven by the need for quality and affordable residential accommodation,” says Paul Nel, Western Cape based Portfolio Manager at TUHF.

However, with the hard lockdown hitting South Africa in March 2020, he says the Cape Town’s City Bowl transformed into a ghost town for six-months with restaurants and hotels having to close.

“While we have seen a gradual recovery with the sector re-establishing itself with entrepreneurs, the scope of the property market has started to change. Much of the focus turned to the kitchen and service market where more than one kitchen would share a larger space/kitchen or even shared space to produce takeaway food for delivery,” says Nel.

The impact on the student accommodation sector can also not be ignored. According to Nel, the University of Cape Town (UCT) supported a mandate for 5 000 units to be developed over the next two years, but this is currently under review due to the impacts of the pandemic and the increased focus on online learning.

He says these factors are contributing to the need for a different developer mindset. Additionally, older developers are retiring or moving into the suburbs with new ones struggling to gain momentum due to difficulties in applying for traditional loans in these challenging economic times.

“And yet, there has been resilience in our market. From Woodstock into Bellville and further up to Kuils River. Also, Durbanville and the informal sectors in Stellenbosch, Worcester, and Wellington have shown a high demand for affordable housing due to the number of agri-business based in these areas,” adds Nel.

Changing dynamics

Velda Derrocks, regional manager for the Cape region at TUHF, agrees. “Many of the vacancies are driven by properties in the CBD and AirBnB units that are not used or being put out in the market for normal rental. However, the affordable housing space is well serviced with not much capacity on offer. Even so, the Cape Town market has been through a challenging few months with some TUHF clients opting to sectionalise their properties and sell off the individual units. All indications are that bad debt and vacancy levels are normalising and edging towards pre-COVID levels.

But this does not mean it is not possible to find investment potential.

“Once we started building an understanding of how to operate in a COVID-driven market, we have seen good collection levels, lower vacancies, and even demand for new units in the Western Cape. Underpinning this resilience is good governance, the type of products available, a transport system that works, and visible law enforcement,” says Derrocks.

Nel believes that because the City Council only approves a limited number of new developments annually, and due to the Council’s thorough understanding and application of town planning and associated laws, there is more manageability of the supply and demand curve.

“The market in the Western Cape has remained relatively flat over the past several years. While certainly having an impact, COVID has not been as devastating here – from a rental perspective – as some other nodes in the country. For example, we have seen significant interest in new areas like Boston and across the eastern seaboard past Blouberg and Table Bay. Historically, these areas see much investment from long term rental investment. That has changed with zoning rights in place creating significant potential for affordable housing there,” says Nel.

Rebuilding for the future

Nel expects the Western Cape to show robust growth and returns over the next five years with new developers coming into the market.

“Office and industrial conversions into residential units will likely happen as the market moves into different, untapped areas. Work-from-home has driven a new product from a residential topology perspective. From our side, we have been continually engaging with our clients and developers to get renewed growth going,” adds Nel.

This includes hosting video conferences with clients and associated professionals that include engineers, quality surveyors, and others to expand the TUHF network in the market. Engagement has been focused on word of mouth and these online activities.

“We have also started engaging with the City Council and its various departments online. This has given us a new awareness of their processes and the different ways that are best to work with each department. Our focus for the short-term is to be consistent in our approach and play a prominent role as facilitators between developers and clients,” he says.

For Derrocks, TUHF realised it needed to adapt to different ways of liaising with clients. “This has resulted in many innovative approaches that we will continue to build on. Virtual meetings might have replaced face-to-face discussions, but our focus remains on adding value to our clients.”

Branching out

“Throughout all this, we still believe in the potential of the affordable housing market in the Western Cape. We can facilitate and assist developers to bring quality products to a market where there is significant demand for it. For TUHF, it is about remaining discerning on the entrepreneurs and developers we partner with,” says Derrocks.

Nel adds that TUHF will continue to educate the market on the potential of affordable residential renting properties. “People need to change their views of affordable housing, especially in the Voortrekker corridor. By engaging with the market we want to attract the right type of entrepreneurs and developers.”

Khulasande Naku, national operations coordinator for TUHF, says this reflects how TUHF is still a good business that does deals that make financial sense regardless of external market forces like the pandemic.

“Our focus is still on empowering the small to emerging entrepreneurs in the property space and diversifying the face of inner-city property ownership, especially in Cape Town. We are continually looking for right sized projects that can be turned into quality assets for the business and our clients,” concludes Naku.

Thandeka Sithole’s interest in providing student accommodation began when she herself was a student at UCT. She had been accommodating students for a night or two, for free, as they arrived in a new city to begin their studies. She had shared this experience when she first came to UCT from Lady Smith, and as she found herself accommodating more and more students for short stays she realized there was a good business opportunity in it.

At first, she began renting out her first house to test the viability of the business idea. Later, she was approached by the CEO of a company in Cape Town – a friend who knew she was subletting to students – and asked if she would be able to provide accommodation for their students. She agreed, and began subletting fully-furnished flats to these students in Cape Town.

“Accommodation, and especially fully-furnished flats in Cape Town, is expensive,” she says, “and though the individuals I was letting too had proved reliable tenants so far the financial pressure was becoming too much, especially at scale.”

Thandeka decided to start approaching companies to become a service provider of accommodation for their students, in order to make her income a little more secure. But she also realised that owning a property would be easier to manage and made more business sense. She began looking for opportunities in Cape Town.

While living in Cape Town, Thandeka saw advert for a building in Durban that looked appropriate to expand her business. She felt it would suit her purposes and that her business could afford the R4 million asking price. She put in an offer, which the agent helped her negotiate down to R3.2 million.

She found traditional finance institutions unwilling to approve her bond, though. In her last meeting with one of South Africa’s major banks, in which her bond application was turned down again, the bank’s representative gave her contact information for TUHF.

Thandeka approached the Cape Town office, and they reviewed her profile and her proposal. Keen to invest, the portfolio manager in Cape Town referred Thandeka to the Durban office because of the building’s location. TUHF’s Durban office agreed to support Thandeka with a loan after meeting her and reviewing her application, pending owners equity contribution of R1.4 million.

“I didn’t have that kind of money on hand,” Thandeka says. But friend loaned her the equity contribution, leaving only the lawyer’s fees to be paid before transfer could go through.

“I didn’t have that money either,” she laughs. “The life of an entrepreneur is hectic. Most people only see you doing well, and they don’t realise you’re not sleeping or eating and nobody can understand you.”

Towards the end of December 2016 the process was done, but Thandeka still needed funding for lawyer’s fees. Fortunately, she had the support of another colleague, who loaned her the money for the lawyers. This allowed the building purchase to go through in January 2017.

The building was in the process of being renovated when Thandeka ownership. These had to be completed to get the building ready for occupation. When they were done, Thandeka went to Durban to view the building and start advertising for tenants. Two representatives from DUT came to see her – letting agents who were operating on behalf of the university. They were looking for accommodation for DUT’s students, and came out to look at the flats. They agreed to take the building almost immediately, provided the units were fully furnished.

Thandeka then had to furnish the flats appropriately, and determine appropriate rates for rental. One of the letting agents gave her some guidance on appropriate rental rates, as well as the facilities students would need.

Thandeka increased the units in the building from 18 to 20, of which six are 1-bed and 14 are 2-bed sharing units. Each unit features a kitchenette, its own bathroom and wifi, and is fully furnished. The building’s communal area is a passage with TVs and couches where students can relax.

The building is within walking distance from DUT, making it ideally positioned for students. In its fourth year of operating, it has historically been fully tenanted during the academic year and was 50% tenanted in March 2021. Thandeka expects it to be fully tenanted by the end of April as students return to campus. “The universities only opened in March, so we’re very happy with how quickly the units have been rented out,” she says.

“With student accommodation you don’t earn rent in December and January because campus is closed, so you have to save up during the year to make those bond repayments and still keep up with ongoing building maintenance and utilities,” she says. “TUHF has been amazing, showing real understanding for the nuances of my business and being extremely supportive whenever there was a need to defer payments.”

Her advice to aspiring property entrepreneurs is: “Just do it. Sometimes you just have to do it and trust God with the rest.”

Situated in the heart of Observatory, Mitra Mews merges history with contemporary design in a beautiful, privately developed small mixed-use precinct, with a retail shop and short and long-term accommodation rentals.

Owned by the husband and wife architect duo Alastair Rendall and Gita Goven, construction of Mitra Mews was completed at the end of last year. The precinct features a complex that offers both short-term and long-term rental options – with nine fully furnished units, including fibre Internet connectivity and smart televisions. Four of the units are duplexes with four-bedrooms and a bathroom on each of the two levels, and five of which are two-bedroom units both with en-suite bathrooms.

The 840sqm site has parking for 11 cars and includes a convenience store, a music studio, letting office, and laundry, as well as a completely refurbished Victorian house which is part of the Observatory Heritage protection Area containing many of the remaining Victorian and Edwardian architecture buildings in South Africa. The precinct is also within walking distance of more than 20 different restaurants and bars as well as the metrorail station, bus stops, and two shopping centres.

Alastair Rendall says, “My wife and I have been in the rental business for 26-years and were looking for an investment that would ultimately allow us to reduce our dependence on our professional service business and generate an income from the rental property. This would free us up in generating innovative solutions to mixed income inspiring settlements. Considering this property was in front of our home it made sense for us to purchase it when it came on the market. It was also small enough to make the development manageable for us without requiring the services of a massive third-party developer.”

Both Alastair and Gita are passionate about designing everything using sustainable materials and making their developments as water and energy efficient as possible. To this end, the complex has been constructed using eco-friendly green-lite concrete blocks, and water supplied by a borehole that is fully filtered and purified on-site. For energy, the development relies on a photo-voltaic water heating and electricity generation system, with heat pump back-up, to help make it as eco-friendly as possible. There is also a predominantly edible urban courtyard landscape with 24 fruit trees and medicinal, herbal and culinary plants. We are also building relationships with our local community to bring events and opportunities that our guests can enjoy as a distinct OBS experience.

“We both feel it is important to build something up in the city without taking it outside of Cape Town. Because Observatory has a high density of Victorian houses and falls in a protected area, it was quite a challenging process to get all the required approvals for the renovation of the house and the construction of the units. The shop front had a canopy over the sidewalk which I wanted to retain as it is quite a feature on the street,” adds Alastair.

Even though Mitra Mews was receiving good online reviews and started building momentum on the rental front, the recent lockdown as part of the COVID-19 containment measures has meant that the owners required to rethink their short-term plans.

“While there is still a lot of uncertainty in the market, we are exploring making the units available to health professionals as we are within walking distance of a hospital. There is also a possibility of continuing with the long-term rentals targeting foreign and local students, but with the second half of the year is difficult to predict as universities will likely continue with online education we are keeping all options open at this stage,” indicates Alastair. Mitra Mews received R11 million in funding from TUHF.

“It has been a great experience working with committed clients like Alastair and Gita. Not only have they followed through on what they promised to accomplish, but they also produced quality work in the development of Mitra Mews. This goes a long way in establishing the foundation of a strong client relationship,” says Anne Meiring, Credit Analyst at TUHF.

“From our side, we are heavily invested in this project on a personal level. My wife and I had to furnish all the units ourselves. Our youngest son is a photographer, so we printed some of his photographs to put in the units as well. Our older son is a musician and is using the music studio to produce his music. He is getting ready to launch his first album globally soon. This adds to us being embedded in the project and doing everything we can to manage the short-term complications of the lockdown by taking a more long-term view of its potential,” says Alastair.

Given the picturesque location and the quality of the development, it certainly does bode a lot of potential that will benefit its owners and tenants well into the future.

“TUHF has created an impact in Cape Town by giving great attention to the Bellville, Parow, Observatory, Goodwood and areas within the Voortrekker Road corridor. Through providing financial backing to private developers, TUHF has assisted in uplifting these formerly neglected and under-invested arears which were regressing rapidly, by improving safety, quality of life and the socio-economic situation,” says Dihedile Mphachoe, Portfolio Manager at TUHF.

Facts

• Location: 31 Station Road, Observatory, Cape Town, 2935
• TUHF Product: Mitra Mews
• Original configuration: Victorian house with old sheds and a shop
• Configuration upon completion: Green townhouse security complex with nine apartments (four 4-bedroom apartments each with two bathrooms; five 2-bedroom apartments each with en-suite bathrooms), shop, music studio, and refurbished Victorian House that contains a 2-bed ground floor apartment, letting office and laundry

The TUHF Eastern Cape regional team highlights the differences in the nodes of East London and Gqeberha (formally Port Elizabeth) and how there are still opportunities to capitalise on despite the challenges brought about by the pandemic.

Despite less than 300km separating the Eastern Cape cities of East London from Gqeberha (formally Port Elizabeth), the contrast in the residential rental property market could not be more significant. The areas these cities cover create a multi-polar economic situation that is shaping the future of development in the province.

“In the pre-pandemic days, East London had an active retail economy. This is hardly surprising given that the former has three levels of government based there – provincial; district; and metropolitan. And even though East London has a good base of government employees, the manufacturing sector has also been driving investment growth – with Mercedes Benz producing its C-Class vehicles for right-hand drive markets there,” says Letlatsa Lekhelebana, portfolio manager for the Eastern Cape at TUHF. “For now, the demand in East London seems to be holding. But we will only get a clearer picture once new stock becomes available.”

Gqeberha, by contrast, was already experiencing a shutting down of economic supporters in the area. Examples include a tyre manufacturer that closed, Aspen Pharmacare reducing its production lines, and one of the big five accounting firms closing its offices. Sadly, things have been exacerbated in the wake of the pandemic.

“This certainly has negatively impacted the rental market resulting in high churn as people have to vacate their flats due to the economic pressures. Though, as the Transnet National Ports Authority is planning to move its head office from Johannesburg and Durban to Gqeberha it is expected that this will bring approximately 400 new families into the city that will provide a significant boost to the rental market – and hopefully is a sign of more things to come to the city,” Lekhelebana adds.

Velda Derrocks, regional manager for the Cape region at TUHF, says that despite the challenges in Gqeberha, with a new coalition government that has been established in the lead up to the pending municipal election, there appears to be a lot of optimism brought about by the change. “Town planning for the area has always been effective, but like all municipalities, things were a bit slow due to people working from home in the earlier phases of the lockdowns and COVID-19 restrictions.”

“Contributing to this optimism is the potential for student rental accommodation in Gqeberha, as the demand for student rentals in Gqeberha remains as high as in East London,” says Derrocks. “East London on the other hand continues to have good demand for residential units, and it is worth noting that we have achieved 100% let-up of a 46-unit development in Belgravia, essentially at the peak of the second wave of COVID-19 infections. This clearly indicates demand for well located, well-operated, clean and affordable housing units. In fact, we are also working with a client on a new development in East London that will be completed soon and offering approximately 108-units. Once completed, the pace of let-up of this development will also tell us exactly what the market demand is now – and towards a post-COVID future.”

Harnessing opportunities

“Furthermore, developments in the inner-city will continue to be driven by demand for student residents. As such, the local government must do everything it can to ensure it is an attractive space for students by getting rid of vagrancy and reducing the amount of crime in the area. We also anticipate demand in areas closer to the industrial districts like Sydenham and Sidwell,” says Lekhelebana.

Additionally, TUHF will be looking at other development corridors closer to the universities and campus areas such as the Medical School of the Nelson Mandela University and other areas such as Algoa Park.

“From an East London perspective, we will continue to operate in those areas that have offered us solid opportunities. Other potential areas for development include the West Bank, Chiselhurst, and Cambridge for residential units,” adds Lekhelebana.

Embracing innovation

Lekhelebana says that in these unusual times, TUHF remains committed to keep on engaging with clients and developers. “Despite the challenges that physical and social distancing requirements can pose on being able to regularly engage with clients in a face-to-face setting, for example, as a business we were able to quickly adapt to working remotely and conducting our daily operations and client engagements etc. through more digitally driven means.”

“We used to host functions for our clients in the Eastern Cape and invite associated professionals like engineers and quality surveyors to expand our network in the market. Obviously, this is not possible now, at least not on the same scale, and we have turned to using online video conferencing to overcome the limitations of lockdown regulations. Of course, we will always be reliant on word of mouth and the relationships we have in place with a myriad of professionals in the area,” says Lekhelebana.

The key message TUHF wants to get out is that it remains open for business despite the external forces shaping the market.

“We are a sensible, profitable business anchored on the concept of massive-small, where we accommodate small players in the sector with a significant amount of residential stock. We will continue to do business but will remain mindful of the new conditions and requirements that this will entail,” he says.

Derrocks agrees. “For both East London and Gqeberha our message is clear. We will always look for potential and scope the business case according to the requirements of the specific residential node. Again, this is where our ethos of massive-small comes in to play. TUHF will never concentrate its risk in one area, but rather do several smaller projects that collectively have the potential for greater or massive impact. We will continue to back entrepreneurs with solid business plans and give them the scope to grow where there is market demand. As long as the entrepreneurs show an ability to execute, we will support them,” she concludes.

The TUHF Group of companies is excited to announce the launch of TUHF21 as a “separate but connected” operation from the Group. The objective is to enable TUHF21 to more rapidly explore other markets, particularly in townships, while growing its existing product portfolio and developing innovative new ones. It will remain connected to the overarching TUHF ethos of ensuring that access to finance for property entrepreneurs is optimised, urban regeneration, densification and management is scaled, and that training and mentorship of clients continues. TUHF21 will also manage all the Corporate Social Investments (CSI) activities which are an important focus of the Group.

Essentially, TUHF21 will focus on three pillars to harness fresh opportunities:

• Managing and growing its Intuthuko, uMaStandi, and other products.
• Developing new solutions based on relevant and practical research.
• Providing impact tracking and reporting services for the Group to ensure the development impact activities continue in a financially sound and highly governed manner.

“As a non-profit organisation, TUHF21 remains proudly not for loss. Financial sustainability will be at the core of our future operations. It will receive an injection of capital through the sale of a portion of our shares in TUHF Holdings and will continue to accrue dividend income from its remaining shareholding. As a founding shareholder and incubator of the well-known TUHF Limited brand which operates in inner-cities and has a successful 18-year track record, TUHF21 now wants TUHF Limited to go into the world on its own and to free up TUHF21 to focus on its newer products. To this end, TUHF21 can now attract new stakeholders and grow its recently developed uMaStandi sub-brand in township markets, among other exciting products and programmes in its stable,” says Lusanda Netshitenzhe, CEO at TUHF21.

This will see the uMaStandi core lending programme driving aggressive targets to reach profitability, and all other programmes will be managed on, at minimum, a cost-plus-margin basis. The research, development and innovation work will be performed in a focused manner with clear lines of funding to each result area to ensure that applied research becomes the driver of any new products that will be brought to market.

Changing lives

It comes down to making an inclusive impact and affecting real change to people’s lives. The inner-cities and townships are not easy markets. But it is in this challenging environment where TUHF21 wants to make the most impactful contributions.

“We want to be able to scale uMaStandi in markets where we see opportunity, and really focus on the development work needed in the country. TUHF Limited will still be assisting us with some of the infrastructure, technology, and policies we built up over the years to ensure that TUHF21 is able to leverage on this long track record,” adds Netshitenzhe.

With a philosophy of creating impact through collaboration and innovation, TUHF21 will build, develop, and incubate financial services solutions that serve urban development needs. And, while each TUHF company will have its own focus areas, they will be collaborating with TUHF21 to drive a more sustainable and resilient urban development agenda that goes beyond the traditional inner-city focus of the Group to include South Africa’s townships.

Urban renewal and management

In many respects, TUHF21 will be the ‘insider/outsider’ to TUHF Limited. It will optimise the urban renewal efforts of TUHF Limited and assist it better manage contributions to urban management, regeneration, and collaboration with communities and local government.

“It is about providing honest input on the regeneration efforts and identify ways to improve on our past efforts. The benefit is now that we are on the outside looking in, we can better see the gaps that exist and look to enhance and advance the work being done,” says Netshitenzhe.

Expanding market

The planned main product line of TUHF21, uMaStandi, will continue to target entrepreneurs and resident landlords who provide backyard accommodation in the townships. It uses the property as equity to fund a rental enterprise where the owner or entrepreneur gets the peace of mind that construction on the property to increase its revenue potential will be professionally designed and built according to the required planning permissions.TUHF21 will seek to further grow and commercialise this innovative initiative that builds on the pillars of all TUHF funding initiatives; such as ensuring that the product is scalable and able to grow rapidly, and that the product is replicable so it can be launched in all major townships across the country, sustainably.

Another product TUHF21 will drive is the Intuthuko Equity Fund (IEF). Established in 2004, this is a unique inner-city property finance initiative supporting previously disadvantaged individuals who want to enter the property investment market but face equity and/or deposit constraints in accessing the finance required to do so.

Netshitenzhe states that the IEF uses individual TUHF Portfolio Managers to provide extensive handholding with the entrepreneurs it funds. “They are training them in the areas where they might lack sufficient knowledge. And if more specialised skills are required, Portfolio Managers match those needs with the relevant external training and mentorship stakeholders. It is all about giving the hands-on training necessary to empower IEF clients with the means to get the most value from their property investments.”

“The central mandate driving TUHF21 will be to incubate businesses through its subsidiary companies like uMaStandi and IEF, rather than having direct contact with entrepreneurs. Its main objective is to ensure that the financial solutions developed have business continuity and are sustainable while always looking for new and innovative ways to provide real development impact,” concludes Netshitenzhe.

Our client, RM, bought a vacant piece of land in Birchleigh on auction in 2016. Now, Nhlulo Maison – meaning The House of Triumph – is home to eight happy families.

“I saw the auction sign on the vacant lot on my way home from church one day. So, I took a chance and went to the auction, buying the land with a bond from one of the four major South African banks,” RM says.

“My wife and I were both employed full time, but we knew we wanted to develop the property to generate income and service the bond,” he says. Unfortunately, the couple weren’t able to secure a building loan, and had to resort to personal loans and credit cards to start building.

“It was a good thing to take a stab – I think the fact that there was development happening on the property showed TUHF that this was a worthwhile project to fund – but that personal debt was very painful to carry.”

While looking for ways to ease their debt burden and finish the development, RM approached TUHF with rough calculations of what it would cost to complete his vision. TUHF did a site visit and a feasibility study, then assisted to complete the documentation needed to apply for loan finance.

“We were about halfway at that stage,” RM says, “but couldn’t finish the project and could only service the existing loans through our personal salaries. TUHF approved our application in 2017.”

Work to finish the build started in 2018, and by November 2020 eight brand new, 2-bedroom units, with carports, were ready for occupation. The ground floor units were put on the market at R 6 000 per month, and top floor units at R 5 800. By January 2021, Nhlulo Maison was fully tenanted.

“Working with Mahlatse was very informative. He helped me every step of the way and taught me a lot I didn’t know, such as the importance of involving a quantity surveyor in developing the project cost estimates,” RM says.

RM also completed the TUHF Programme For Property Entrepreneurship (TPPE) and appreciated having Henry Chitsulo from Bold Moves as his mentor. “We did a practical exercise as part of the course, where we visited a building in downtown Jozi to do the calculations for refurbishing it, and it was a real eye-opening experience, and inspiring,” RM says. “I almost wanted to tackle that building on my own!”

The original loan from TUHF was for R 1.9 million. Though the first tenant had signed up in May 2019 – a promising sign for quick return on the investment – South Africa’s hard lockdown did create some challenges for RM both in terms of signing up tenants and in terms of keeping up to date with payments to the contractor. “I got a lot of support from Mahlatse at TUHF, though. For example, during the lockdown Mahlatse assisted on a call with the contractor to come to agreement on when funds would be available to pay the account, which allowed us to continue and complete the build.”

“It’s so amazing. Every time I visit Nhlulo I love what I see. My wife and I started from scratch and it’s great to see what we’ve managed to achieve on a vacant lot. The tenants have also formed a close community where the kids all know each other.”

Nhlulo Maison is close to Birchleigh Primary and High School, a park with a jungle gym, and a shopping complex which makes it ideal residential space for young families. It’s also near Glen Marias’ developing business hub.

When asked for his advice to aspiring property entrepreneurs, RM says: “Understand the bill quantities! For example, the original costing for this project didn’t include paving for the full area, so we had to approach TUHF to make up the short fall. But working with TUHF means that, as long as you do your homework properly, you don’t need to be fearful of the funding side. TUHF can help you to make it work.”