1. Please give me a brief introduction of what International Housing Solutions is all about.
IHS is a private equity firm focused on affordable housing sector for low income segment. The first fund was raised in 2008 in South Africa and since then have raised 3 other funds and listed a REIT on the JSE. IHS has primarily been operational in South Africa, Namibia and Botswana and are currently in the process of establishing the first fund in Kenya.
2. What drives you to invest in this sector so heavily?
Housing is fundamental to a comprehensive and sustainable development of a country from a socio-economic perspective. Affordable housing does have a multiplier effect and real tangible impact can be realized through the provision of well located, safe and dignified affordable housing. We see it as a necessity for general wellbeing and a healthy family environments. Unfortunately, a sector of such importance is highly short of supply and we are only trying to bridge this gap by providing safe and well located developments.
3. A lot of mainstream investors do not actively invest in this segment. Why?
Historically affordable housing has not been viewed as an institutional asset class. Popular asset classes are offices, commercial and high-end residential developments underpinned by leases. Whereas housing, is market driven and is a specialized segment compared to others. Similar trends are seen throughout emerging economies, in South Africa we aimed at educating the market on affordable housing fundamentals and it took some time for us to make the private sector comfortable with the idea. But primarily I feel it is due to limited exposure to the sector.
4. What in your opinion is a better option on solving the housing crisis? Focus on ownership or rentals?
Historically the focus has been on sales and not rental. However, we are primarily focused on institutionalizing the rental market and creating an institution which specializes on the delivery and management of affordable housing. Currently about 91% of the housing market in Nairobi is rental, and 60% of this is low quality, poorly located and poorly managed housing and informal settlements. We do however also realize the importance of ownership, and a sleeve of the fund will be allocated to the open market sale of affordable housing.
5. From an investor perspective what is that you most desire in a developer?
Should be passionate about the industry and should have shown the ability to deliver good quality housing.
6. What kind of investment budgets do you currently have in your portfolio for this sector?
We establish funds with each one treated separately. So I can’t give you a particular figure but to quote some, we are looking to raise our 4 th fund in South Africa of USD 150-200million & in Kenya USD 180- 200 million.
7. Since you are addressing the subject of the most promising countries for affordable housing
investments in Africa at the AHIS, what is your take on it?
We do a broad assessment on the continent and there is excessive demand due to emerging economies. I would say South Africa has made significant progress with extensive government participation. But they still have a significant housing crisis that needs to be addressed.
8. As a company you also largely focus on green investments. Please tell us how this has helped
We are moving to a space of green buildings which differentiates us. The benefits of this, is ultimately transferred to the end user.Consumers are becoming more educated and aware about the benefits. We have a target of over 7000 green housing units in South Africa. We intend on greening all future housing developments in Namibia and once the Kenya is established we will also look to develop climate friendly green affordable housing.
9. Lastly, as you are one of the key attendees of AHIS, please tell us why is it important for one
to attend this summit?
Affordable Housing is a speedily emerging sector which demands skill and information transfer. And AHIS creates a platform for key stakeholders to share knowledge, collaborate & share ideas. For advancement in the sector I think it’s important to have platforms like AHIS.