Speaking to Engineering News Online on Tuesday, CEO Neville Nicolau highlighted that integrated housing development was of strategic importance in the future of the country, as for many years, South Africa had “perpetuated apartheid” by building entry-level housing in less accessible areas, in contrast with more expensive estates, effectively “splitting up society”, which has for some time now been undergoing a shift.
The division on Monday reported operating profit of R8.6-million for the six months to June 30, down from R14.8-million in the six months to June 2015; however, the company’s order book in the sector grew from R200-million to R470-million over the same period.
Nicolau explained that, over the last ten years, Basil Read had been involved with the Cosmo City development, west of Johannesburg, where entry-level housing and middle-class housing were mixed together in an area where auxiliary amenities were also built, including schools, shopping centres, churches and industrial areas.
“You end up with an integrated society,” he pointed out, adding that the company was close to completing Cosmo City.
Basil Read is also involved in the development of Savanna City, in the south of Johannesburg, where unit sales continue to exceed expectations, underscoring the demand for affordable housing, with some 700 families already living in the development.
“We are looking to develop this idea and are in talks with government, as well as private companies that have land available and are ready for this kind of development,” Nicolau said.
This includes partnering with Old Mutual’s Housing Impact Fund of South Africa, the Gauteng Department of Human Settlements and the Midvaal local municipality to ensure its 1 400 ha Savanna City project sets a benchmark in economic development and housing.
Currently, Basil Read is installing internal bulk services to support the continued roll-out of stands.
Nicolau pointed out that the integrated housing development model also generated work for the company’s construction and roads divisions, which would allow for greater control of its order book, in time.
“If we increase the number of integrated development sites that we are working on, we will control our order book – a competitive advantage for a construction company. [We] are very often at the mercy of the market, the State and outside factors,” he said, adding that this division added some stability.
Meanwhile, the company highlighted that progress at its Malibongwe Ridge development had slowed owing to the budgetary constraints of key government partners. Servicing for the first phase, comprising 486 fully subsidised residential stands, is complete and 41 homes have been handed over and occupied by residents.
Nicolau explained that the company continued to see growth in South Africa, despite the subdued building environment, as the country had capital to support infrastructure growth, unlike other countries in sub-Saharan Africa.
He highlighted that while the roads sector was slower at the start of the year, moving into a rehabilitation-and-maintenance-dominated phase, it had started to pick up again.
Nicolau added that other projects, such as water and sanitation, major port upgrades and the rail sector, would further bolster the company’s order book in months to come.
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