• IFC has announced an investment to support South African residential property developer, Alleyroad in order to improve access to affordable housing.

• The project will help reduce the housing gap in Johannesburg’s affordable housing market.

• The apartments will be designed to meet IFC’s EDGE Advanced green building standards.

IFC has announced an investment to support South African residential property developer, Alleyroads, to build over 1,000 rental apartment units in the Johannesburg area in order to improve access to affordable sustainable residential housing in South Africa.

The 325 million South African rand loan granted to Alleyroads will help the company finance construction of the apartments, which are aimed at lower-to-middle-income households with an average annual salary of about ZAR238,000. The apartments will consist of two bedrooms with an average size of 62m², and will be built near hospitals, schools, and markets, and will provide green spaces and play areas for children.

This project will help reduce the housing gap in Johannesburg’s affordable housing market, which faces a significant shortage, particularly in the ZAR4,000 to 6,000 per month rental segment. It will support economic activity by creating 860 jobs during the construction phase, and 45 jobs during the operating phase. Project completion is scheduled for 2023.

The Managing Director of the Alleyroads Group, Ivan Pretorius said, “The Group is extremely thankful to IFC for having the confidence in our ability to deliver these much-needed housing units to this sector of the residential market. The team is ready to roll up their sleeves and ensure the timely delivery of excellent quality units,” 

The IFC Country Manager for South Africa, Adamou Labara said, “Affordable rental housing is essential for improving quality of life in South Africa, particularly for younger people and those that do not qualify for or cannot afford a mortgage. IFC’s investment in Alleyroads will improve access to good-quality, affordable residential housing in South Africa, which is positively linked to social benefits like better education and health outcomes.

The apartments will be designed to meet IFC’s EDGE Advanced green building standards, this means they will be zero carbon ready and among the first residential units to achieve such a high resource efficiency in sub-Saharan Africa. Alleyroads will install on-site solar panels to supply about 30 percent of the development’s energy needs.

Since its establishment in 2009, Alleyroads has become a leading affordable housing developer in the build-to-rent and green building spaces. The company is helping South Africa meet the rising demand for affordable rental housing, which is driven by population growth and rapid urbanization. 

“The transaction represents a significant milestone in the evolution of the Alleyroads Group and signals the intention of the company to be one of the pre-eminent leaders in the affordable residential housing market. We look forward to a continued partnership with Alleyroads and IFC”, said Mesh Pillay, Chief Executive of YW Capital, exclusive advisor to Alleyroads.

Alleyroads is a locally owned level 2 black economic empowerment (BEE) company. IFC is committed to supporting the government of South Africa’s economic transformation agenda and increasing the financial participation of historically disadvantaged citizens.

As part of its support to South Africa’s housing market, IFC is working with partners in the country to improve access to affordable housing and student accommodation.