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Access to capital and funding is one of the largest barriers to entry for any business and in the property development industry this is no different. Financial institutions and investors are often reluctant to provide loans to small businesses without a proven track record or collateral.
A fund for developers in Gauteng
Thanks to the establishment of the Gauteng Partnership Fund (GPF), Gauteng developers have access to structured finance that allows them to enter the market affordably and to deliver projects, which alleviate the pressure off the need for affordable housing in the region.
Established in 2002 by the Gauteng Department of Human Settlements, the primary purpose of the GPF is to facilitate the development of integrated and sustainable human settlements for communities in Gauteng. They achieve this by providing loans to private sector developers for the development of affordable rental, student accommodation and social housing projects.
In addition, they also raise and manage the capital required for the successful implementation of identified sustainable human settlements, but they also serve as a turnkey property developer on strategic public land; as well as provide management services, project development, and implementation services for identified Mega Projects as well as upgrades of informal settlements.
Economic empowerment for the region
Chief Executive Officer of the Gauteng Partnership Fund, Lindiwe Kwele says that over the two decades since the Fund was established, they have built up strong critical skills in structured financing, project packaging, and investment facilitation.
‘We see ourselves as the preferred partner to the government, property developers, as well as co-funding partners, thanks to our long track record of promoting economic empowerment by offering preferential rates to BBBEE-accredited developers, a variety of attractive products, as well as the job creation and local economic development spin-offs stimulated by projects we’ve funded.’
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She adds that “maintaining a positive reputation is essential to the attraction of new investors and sustaining our existing investor partnerships”.
Various projects supported by the Fund
The funds are not only reserved for the most experienced. Developers of varying experience can apply to the GPF for financial assistance through more than one product. These include the Entrepreneur Empowerment Property Fund (EEPF), the Student Accommodation Fund, the Rental Housing Fund, the Social Housing Fund, the Commercial Housing Fund, and a newly launched Kasi 4 Real product.
This program is designed to enhance the township economy through providing funding for the development of backyard housing. So, people who have homes in any of Gauteng’s townships and are in possession of the title deed or are the executor can build rental units in the backyard of their units via funding from the GPF.
While there are various Development Finance Institutions (DFIs) across the country, the GPF operates solely in the Gauteng province, and their mandate, funding model, and comparatively more affordable interest rates set it apart in the affordable housing market
Empowering entrepreneurs and providing homes
Muma Investments is one development company that has benefited greatly from the GPF’s backing and support. Dandy Matamela, who leads Muma Investments, received funding from the Fund’s Entrepreneur Empowerment Property Fund in 2013 when the company secured its first property development project called The Dawn Village.
The project entailed the development of 53 units in Pretoria North worth R21m. The project has proved to be a success with construction completed in record time. Matamela has since developed a second development with GPF backing called the 125 Village Hub – also in the capital city.
Parties interested in finding out more are encouraged to familiarise themselves with the qualification criteria for each product via the GPF website, gpf.org.za before applying for funding. An application can be made via applications.gpf.org.za.