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Conradie Park’s model for sustainability

An innovative business model is setting Cape Town’s mixed-use Conradie Park development up for the long term

By Estate Living

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Conradie Park’s model for sustainability

An innovative business model is setting Cape Town’s mixed-use Conradie Park development up for the long term

By Estate Living

, |

Conradie Park, a new mixed-income, mixed-use housing development in Cape Town, has been launched for sale to the public. Its marketing campaign lauds its ‘affordability, sustainability and security’, but how exactly will it be funded and maintained in the long run?

 

Self-contained town

The R3-billion, 22-hectare development – a partnership between developers Concor and the Western Cape Government – comprises more than 3,500 homes. It’s located near main arterial routes and the Mutual and Thornton railway stations in Pinelands, a Cape Town suburb best known for Mutual Park, the enormous local headquarters of Old Mutual.

With plans for businesses and a school, the development is being touted as an ‘affordable, sustainable, self-contained town for the future’ – and much of that promise is based on the underlying business model.

‘The housing is divided into three categories,’ explains Mark Schonrock, Property Development Manager at Concor. ‘First we have the rental units, which are managed in perpetuity by social housing organisation, Own Haven. These cater for people with monthly incomes of R3,500 to R15,000.

‘The second category is our Finance Linked Individual Subsidy Programme (FLISP) units, for individuals with a R7,500 to R22,000 salary income. These units start at R550,000 for the studios and go up to a maximum of R720,000 (including VAT and conveyance fees),’ he says. The programme is a housing subsidy to assist first-time home buyers. It’s paid into beneficiaries’ banks or financial institutions, with the aim of reducing monthly loan instalments and making it more affordable to purchase a home.

‘Then the third category is for incomes of R22,000 and up,’ Schonrock concludes. ‘These are the sectional title units, which range from R950,000 up to R2.8 million for a duplex.’

Added to the residential units, Conradie Park will also accommodate business and retail properties, along with a school and a large public park.

 

Mixture of price points

That mixture of properties and price points underpins the business model. ‘We’re creating an environment that’s safe and enjoyable for all people, but it comes with certain costs,’ says Schonrock. ‘If it were only FLISP, or only social housing, the costs of running that in perpetuity would not be sustainable. You have to have the range and the other industries – some commercial, some retail – to make it sustainable. Residential on its own can only sustain a certain amount. If you want security, landscaped areas and irrigated parks, that comes at a cost and comes with a levy. And if half your housing is grant-funded, the levy needs to be affordable.’

Property investors quickly find that, in effect, they’re paying three levies: rates and taxes, a body corporate levy, and a Property Owners Association levy. ‘We looked at the price points of successful developments and improvement districts around the country, and ours is in between,’ says Schonrock. ‘So it’s not as affordable as the City’s improvement district, but then we’re providing estate-type living with controlled and monitored security.’

 

Climbing the property ladder

One of the criticisms of housing grants like FLISP is that buyers will simply buy cheap, and then sell immediately to turn a quick profit. ‘From a legislative point of view there’s nothing to stop that,’ says Schonrock, ‘but as part of our Property Owners Association Constitution we won’t give you a rates clearance certificate or a levy clearance until a full year after purchase. We don’t want people to come in, buy, and flip the property.’

Still, part of the intention of RDP housing is that low-income owners would ultimately resell the property, creating a market stimulant that lets in new first-time buyers. ‘I totally agree with the concept, but the reality is often very different,’ says Schonrock. ‘An RDP house costs R300,000 for a reason. As a developer it’s so hard to bring a unit in at R500,000. First you have to get the land for free, then you end up having to build a unit that’s so small it feels like a shoebox … and then you can’t build vertically, because there’s extra expense as soon as you do that. That’s why RDP homes are always single-storey units. So the concept is great, but practicality you can’t build anything for R300,000 that’s vertical and that’s going to add any real value.’

Schonrock says that the intention with Conradie Park’s FLISP units is that buyers will get ‘the most amazing capital growth. You’ve a two-bed, one-bathroom FLISP unit in a beautiful vertical building, which from the outside looks and feels exactly the same as a social housing building and a market housing building.

In fact, he says, the only differences are that the FLISP unit is slightly smaller than the two-bed market residential unit (45–48m², compared to 60–65m²).. ‘But the FLISP person is paying R720,000 for their unit, and they’re next door to a market residential guy who’s paying R1.6-million,’ Schonrock says. ‘So if they buy a unit and spend a bit of money doing up the kitchen, there’s really very little difference between the two.

‘FLISP is achieving its intent to get first-time home buyers onto the property ladder,’ Schonrock adds. ‘We only have 550 FLISP units, and the lucky people who buy one are going to get onto the property ladder, and will enjoy great capital appreciation. If they sell it at a 25% or 30% premium in a year or two … well done to them.’

The goal, ultimately, is for Conradie Park to become a space where people can improve their lives, and the balance of price points available in the development provides opportunity for upward movement on the property ladder. It also allows Concor and the local government to build and sell affordable units, knowing that the business model gives them the support – and built-in sustainability – to do that.

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1 Comment
  • Tina Cain
    Posted at 09:56h, 18 May Reply

    Hi,

    I am interested in this property, rent to buy.

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