French development finance institution Proparco led the significant investment of R550 million (US$28.7 million) in collaboration with South African investment management company 27four. Diversity Urban Real Estate Group. This investment will involve reinvestment from existing stakeholders and will be a major boost for the company.
The primary purpose of this capital injection is to support the expansion of Diversity’s real estate portfolio and strengthen its balance sheet. Karel Klinghans, CEO of Diversity, emphasized the importance of this investment and its role in enabling the development of over 2,500 new apartments. Klinghans also emphasizes the importance of showcasing the positive impact of diversity and the commercial viability of economically productive, sustainable and empowering urban development models.
In South Africa, a significant proportion of affordable housing is located on the outskirts of cities, far from economic opportunities and essential services. This spatial arrangement perpetuates historical isolation from the apartheid era and impedes various social, developmental, and economic advances.
Founded in 2017 as a South African investment platform, Divercity is committed to providing affordable rentals. housing It has the amenities associated with a densely populated urban center. 27four principal Malde van Wyk acknowledges the urgent need for affordable, quality housing in South African cities. With great enthusiasm for innovative approaches to diversity to address this ongoing challenge, 27four is proud to contribute to its expansion efforts.
The investment by Proparco and 27four is in line with the government’s focus on strengthening affordable rental options to address the severe housing shortage. It also aims to address the longstanding problem of spatial segregation within the country. A recent report entitled “Growth through Inclusion in South Africa” by the Harvard Growth Institute highlighted that spatial exclusion is a significant impediment to South Africa’s economic growth, alongside challenges related to state capacity. To overcome these obstacles and foster economic growth in South Africa, the report recommends the development of densely populated residential clusters in close proximity to business centres. This is exactly the goal that Diversity is working towards.
The R550-million capital injection will not only boost foreign direct investment into South Africa, but will also leverage the deep local expertise of 27four, a trusted in-country investment partner. This significant investment will have a significant impact on the South African market.
Gregor Kiniu, Managing Director of Proparco, emphasized that this initiative is about more than just revitalizing South Africa’s cities. It also provides an opportunity to support energy efficient building programs with a focus on achieving EDGE certification. This work seamlessly aligns with various development goals, including Sustainable Development Goals (SDGs) 5, 8, 11, and 13. These goals include a variety of objectives, from creating jobs to addressing gender inequality. Diversity strives to provide safe, first-class accommodation to our tenants, of whom approximately half are women.
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