Case Study 14 | Financing Micro-Developments of Residential Rental Stock

It is well known that the majority of housing across Africa is built incrementally by households themselves or by small builders contracted by households. In South Africa, policy and practice, including financial products and services offered by lenders, imagine a larger scale of provision in which an experienced developer delivers new housing, primarily for ownership, within greenfield projects. In the absence of products and support services crafted to their circumstances, “owner-builders” or “micro-developers” finance their construction projects opportunistically from multiple sources including savings, loans from friends and family, and, in some cases, personal loans from lenders. This has an impact on the efficiency and scale of their operations, the costs associated with construction and the supply of affordable housing in the area.

The case study documents the experiences of seven small-scale entrepreneur landowners and micro-developers in financing the construction of what constitutes an emerging supply of residential rental stock in Cape Town’s predominantly working-class areas of Khayelitsha, Delft, the Wallacedene area of Kraaifontein and Masiphumelele. Through a set of interventions, the case study concludes on how policymakers, regulators and lenders might support the efforts of entrepreneur micro-developers to build a sustainable delivery system for this market segment. In addition:

Annexure 1 of the study provides detailed individual stories of the seven small-scale entrepreneur landowners and micro-developers.
Annexure 2 provides a summary of the policy and development regulations relevant to the ventures of the case study respondents.