Proparco and 27four Invest R550 Million in Divercity to Expand Affordable Housing in South Africa
Proparco, in collaboration with South African investment manager 27four, has led a R550 million investment in Divercity Urban Property Group. The investment aims to support the growth of Divercity and optimize its balance sheet, focusing on expanding access to affordable housing in South Africa. Divercity is dedicated to providing affordable rental housing with amenities in centrally-located urban areas, addressing spatial segregation challenges inherited from the Apartheid era.
Investment Details:
- Proparco and 27four have led a R550 million investment in Divercity Urban Property Group, with a focus on affordable rental housing.
- The investment will fund portfolio growth and optimize Divercity’s balance sheet.
- The goal is to contribute to reversing spatial segregation and addressing the severe housing shortage in South Africa.
- Divercity’s Mission and Impact:
- Divercity is an investment platform dedicated to providing affordable rental housing in high-density urban precincts.
- The initiative aims to combat spatial exclusion, a significant barrier to South Africa’s economic growth, as identified in the “Growth Through Inclusion in South Africa” report by Harvard University’s Growth Lab.
- The investment supports the development of over 2,500 new apartments, showcasing the impact and commercial viability of Divercity’s urban development model.
- Government Priority and Spatial Planning:
- Affordable housing is identified as a key priority by the South African government, given the housing shortage and the need to address spatial segregation.
- Divercity’s approach aligns with recommendations to build more dense housing clusters closer to business centers, as suggested by the Growth Through Inclusion report.
- Foreign Direct Investment and Local Context Understanding:
- Proparco’s investment catalyzes foreign direct investment for South Africa while leveraging the local context understanding of in-country investment partner 27four.
- The collaboration is seen as a high-impact deal benefiting the South African market.
- Social and Development Goals:
- The investment aims to achieve several development goals, including Sustainable Development Goals (SDGs) 5, 8, 11, and 13.
- Focus areas include job creation, combating gender inequality, and providing safe and high-quality accommodation, particularly for women.
The R550 million investment in Divercity by Proparco and 27four signifies a substantial effort to address South Africa’s housing challenges and combat spatial segregation. The focus on affordable rental housing in urban areas aligns with government priorities and international recommendations. The collaboration aims to have a positive impact on economic growth, social inclusion, and gender equality, reflecting a holistic approach to sustainable urban development.
