Barlow Park, a mixed-use development in Sandton, will launch its first two phases consisting of 1,600 affordable rental apartments, a Curro School and convenience retail in February 2024.
The phased development has an estimated value of about R3bn once complete, with phase one and two costing about R1.5bn. Construction of the 100,000m2 (10ha) site commenced in June 2022.
Divercity Urban Property Group and Atterbury, in partnership with Barloworld, Twin City and the Moolman Group, are the developers of Barlow Park.
Divercity invests in affordable rental housing in well located urban precincts with scale. Its portfolio, valued at R3bn, consists of more than 6,500 apartments with additional office, retail and educational space and includes Towers Main in the Absa Precinct and Jewel City in the Johannesburg CBD.
“I believe Barlow Park will be recognised as a complete step change in what people think affordable housing is,” said Carel Kleynhans, CEO of Divercity Urban Property Group.
Kleynhans said the group, which focuses on developing affordable rental units close to economic opportunities, took the learnings from Jewel City in the Johannesburg CBD and upped the standard at Barlow Park.
Barlow Park, situated at 180 Katherine Street, offers studio, one and two-bedroom rental apartments priced from R4,899 a month.
Kleynhans said Sandton is the largest employment node in Gauteng, and many people cannot afford to live in and around the area because rentals are high. Barlow Park will offer many people a chance to live in Sandton at affordable prices.
He said the site was earmarked before the pandemic to be a mixed-use development with predominantly premium grade offices. When the pandemic hit, and with the oversupply of office space in Sandton, plans changed, turning this into a mixed-use scheme with about 4,000 affordable rental apartments on completion.
With increasing demand driven by a chronic shortage of quality stock in well-located areas, some institutional investors are inquiring more about the asset class, said Kleynhans.
Unlike in the UK and the US, SA’s residential listed property sector is small, accounting for about 3% of the market.
The sector needs scale and SA has limited investable residential rental stock portfolios suitable to investors like pension funds, said Kleynhans.
“Of the 10 largest pension funds in SA, about four have these assets approved by their trustees in the past 12 months.”
Kleynhans said in developed markets, these assets are as big as retail and industrial property assets — and prized by pension funds.
“When well developed, designed and managed, they produce stable rental income and are less volatile, making them attractive to pension funds and other institutional investors.”
He said these assets have traded at consistently low capitalisation rates and higher valuations for the past 30 years in the US, for example. Capitalisation rates are a measure of a property’s value in proportion to its projected cash flow.
“Divercity remains focused on developing prime rental assets in good localities to make them accessible to pension funds.”
Barlow Park will offer uninterrupted power and water supply, a recreation centre, clubhouse, pool, business centre, coffee shop, lush green spaces, gym and sports facilities, a Curro High School and neighbourhood retail with stores including Checkers, Clicks, Mr Price, PEP Home and PnP Clothing as well as fast-food establishments and restaurants.
Divercity has received the EDGE Champion recognition from the IFC, the private sector arm of the World Bank Group, as part of its commitment to certify 100% of its portfolio with the EDGE certification. EDGE is a green building certification system focused on making buildings more resource efficient.
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