Balwin Properties is expanding its rental portfolio with a development pipeline of up to 7 300 apartments over the next eight to ten years.

“We are very excited about the launch of our rental portfolio which will be complementary to our current build-to-sell model. Having a substantial rental portfolio will serve as an incubator, enabling tenants to progress up the property ladder by eventually buying their own Balwin apartment,” comments CEO of Balwin Properties, Steve Brookes.

“At the same time, it allows us to unlock our landbank a lot quicker, as the first phase of 7 300 apartments represent approximately 20% of our land bank.”

Land parcels for the first six built-to-rent developments have been identified in Johannesburg East, Tshwane East, and the Western Cape. Estates will be developed exclusively for rental purposes with none of the rental apartments available for sale on the open market.

“Over the past few years, we have steadily expanded our capacity, skills, technology, and systems, and we’re now in a position to roll out a scalable and efficient rental portfolio without detracting from our existing build-to-sell model,” adds Brookes.

The portfolio will target market rentals of between R6 000 and R13 000 per month for one-, two-, and three-bedroom apartments, while retaining certain lifestyle elements such as solar, high-speed fibre connectivity, and facial recognition access control. The rental developments will also maintain the EDGE Advanced certification synonymous with Balwin’s build-to-sell model.

These developments have been sufficiently cost-engineered to feasibly generate above market-related yields. Although the Group expects Balwin Rentals’ initial revenue contribution to be negligible for the financial year to 28 February 2025, it will increasingly contribute to the Group’s annuity income and net asset value growth over the medium term.

Balwin Rentals will have full control over the rental estates, allowing Balwin to optimally manage costs. The management of the rental portfolio will be internalised and as far as possible, be tech-driven to reduce operating costs and enhance yield performance. The use of technology will further ensure smooth and efficient onboarding and collection of rental income, reducing the need for an aggressive headcount increase as the business is scaled.

Moreover, Balwin Rentals envisages raising long-term debt finance from commercial lending and Development Finance Institutions at preferential interest rates to fund the development. As with Balwin’s build-to-sell model, developments will be constructed and tenanted in phases to minimise risk.