FIFI PETERS: Let’s get into our first set of results coming out from the property sector. Balwin has come out with its first-half numbers earlier on today, telling us that quite a lot of people are moving to the coast. Balwin Properties, which owns quite a number of apartments across the country, says that revenue from the coastal regions – where it has properties – increased to 53% of its portfolio in the six months to August. This is more than half of its portfolio. The rest comes from Gauteng.
We have the CEO, Steve Brooks, for more on the numbers. Steve, good to catch up with you again. What’s driving this move to the coast in your view?
STEVE BROOKES: Hi, good evening. Yes, I think the fundamental (thing) is Gauteng has become a city floor to bad infrastructure, potholes and all sorts of things. People are looking for a better life and their children’s schooling, education and safety, and the Western Cape has got it together. So there’s a big semigration down to the Western Cape, and what you’ve learned from Covid is that people can also effectively work quite remotely.
FIFI PETERS: So 53% of revenues now come from the coastal regions. Do you think that the right-sizing and restructuring of your revenue pie is done, or do you expect this level of semigration that you saw in the period to continue in the period ahead?
STEVE BROOKES: Yes, I think it will continue. But I’m hoping that in Gauteng, the sort of financial capital of South Africa, we’re hoping that we can see some improvement in infrastructure, improvement in the way the city’s been operating, and hopefully it’ll stabilise.
FIFI PETERS: In Gauteng, though, you own quite a number of appartments in the Waterfall area, and the feedback, according to the results, is that things are still going pretty well over there in Waterfall. What do you think the appeal is? Why do you think tenants like it so much?
STEVE BROOKES: Well, Waterfall has just recently rebranded as Waterfall City. It’s phenomenal, some fantastic far-thinking people. The Mia family have developed an incredible place with great infrastructure. A good, safe place, a beautiful mall and good recreation. So we’ve got a lot more planned in that Waterfall area. We really like the node.
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FIFI PETERS: Which node don’t you like right now, just in terms of any weakness that’s creeping into the system as a result of the environment still being pretty tough as a result of affordability being a lot harder with rising interest rates? Which part of your property portfolio is giving you a bit of sleepless nights?
STEVE BROOKES: I think that’s a tough question. Look, we’re in the solid demographic areas. We don’t do any of what I call the secondary cities or the outlying areas. I think the biggest area that keeps me awake at night is infrastructure, the Eskom problem and the power.
We get blamed extensively for it, which obviously is out of our ability to control. So I think the sleepless nights are infrastructure, water, electricity, roads – those kind of things – that are beyond our control.
FIFI PETERS: In another part of the business I see the annuity business also holding up pretty strongly in this period. This is the part where you provide fibre to some of your residents, as well as originating bonds. Strong growth has been reported in the period, up 80%, with revenue coming in at R37.9 million. What’s behind this growth, and what are your plans for this business?
STEVE BROOKES: Look, it’s a big drive. Our annuity business is headed up by Raaziq Ismail, a really competent guy. We’ve got a great team of people. We want to grow this business. We’re looking at a massive amount of improvement for our clients, making sure that our clients also enjoy the ride as we go through annuity.
The big thing is to try and get our developments more sustainable.
Obviously with fibre and the mortgages that we do, we are looking at solar on our developments, so we can hopefully eradicate some of the early load shedding and then some very, very effective water harvesting, the black-water harvesting.
FIFI PETERS: So what’s that going to do to the price of moving into one of your establishments?
STEVE BROOKES: Well, we are hoping that [for] our clients, we’ll still deliver good value, but the annuity will benefit the client. We want to try and reduce the burden on the clients of load shedding. We also want to decrease their cost of electricity, which is a big driver for us.
FIFI PETERS: Certainly. Steve, we will leave it there, sir. Thanks so much for your time. Steve Brookes is CEO of Balwin Properties. It is really interesting that people want to live in a place, in an economy where there’s good infrastructure and good service delivery and yes, a functioning state, as it were. It looks like the Western Cape is winning on all scores. Gauteng I think needs to level up as the financial capital of this country.