6 new residential estates coming to South Africa where you can’t buy

Listed property group Balwin is chasing a new exclusive rental-only business model to boost revenue and protect its business from market shocks.

The new model is being launched at six new estates and two existing developments over the next few years, where 6,200 apartments will be available for rent only, and sale is not an option.

According to Balwin CEO, Stephen Brookes, the group is looking at the model as a way to build resilience and provide a more defensive position in its business.

This is a new revenue stream for the group, with two active developments currently operating under the model, and more in the pipeline.

The first development on this model is The Eastlake, in Linbro Park, east Joburg.

Balwin plans six more developments for exclusive rentals, including The Klulee and Northview in Joburg, The Creek and The Kloof in east Tshwane, and The Spruit in Somerset West, in the Western Cape.

Exclusive rentals at existing estates, including Greenpark and The Blyde are also being identified.

Estates developed for the rental portfolio are exclusively for rental purposes, Brookes said, with the aim of pushing tenants up the property ladder and ultimately opening them up to owning.

No apartments in these developments are available for sale. The first phase of approximately 6,200 rental apartments will be developed over the next eight to ten years, the group said.

The rental business forms part of Balwin Annuity which aims to develop alternative, annuity-based revenue streams to support the group’s core operations.

This comes after a challenging year in FY25, which saw the group stage a late-year recovery in the second half after taking massive hit in the first six months.

Financial results

Despite reporting a 6% drop in revenue to R2.22 billion for the year ending 28 February 2025, Balwin’s profits after tax were up to R234 million, from R217 million the year before.

This was owing to the year being a “tale of two halves” it said, where the first six months of the year saw profits tank 60%.

However, with South Africa experiencing an solid economic recovery in the latter months of 2024, as well as the start of an interest rate cutting cycle, the group managed to reverse its fortunes.

The group recorded 62% of its annual revenue and 67% of its profit for the year in the second half of the period.

This improved trading performance in the second six months was led by the 75 basis point reduction in the prime lending rate since September 2024 together with the initial positive sentiment that followed the formation of the Government of National Unity (GNU) in June 2024.

“Despite the reduction in the prime lending rate being lower than expected, the rate relief had an immediate positive impact on the group’s sales, with the monthly average gross sales rate increasing by approximately 30% since the start of the rate cutting cycle,” it said.

Balwin noted that the overall picture still reflected the sustained economic pressure on consumers, owing mainly to the prolonged high-interest rate environment and growing local and international political uncertainty.

Group revenue totalled R2.2 billion (2024: R2.4 billion), a reduction of 6% over the prior year with 1,749 apartments (2024: 1,892) recognised in revenue for the year, an 8% reduction from the prior year.

Revenue was supported by Balwin Annuity which experienced strong growth and increased revenue by 33% to R175.8 million (2024: R132.5 million), contributing 7.9% (2024: 5.6%) to the total group revenue.

The group gross profit margin recovered to 30% (2024: 28%), largely due to the performance of the Balwin Annuity businesses.

The gross profit margin from the sale of apartments was consistent with the prior year at 24% as the trading environment remained challenging.

Balwin Annuity contributed R171.7 million (2024: R131.0 million) to the group’s gross profit and supported the gross margin.

Given the uncertainty of current trading conditions and the economic environment, Balwin opted not to declare a dividend—the same as last year.

“The board’s primary focus in this environment is to apply capital to reducing the group’s debt exposure. The board will reconsider the declaration of a dividend for the 2026 financial year,” it said.

Looking ahead, Brookes said that the South African property market should continue to recover with more interest rate cuts expected.

However, uncertainty is still very much part of the picture.

“Although lower interest rates are expected to stimulate demand for our apartments, ongoing local political uncertainty and global geopolitical risks may delay a sustained recovery in the residential property market,” he said.