Grace Ashiru
Proparco, the French development finance institution, in collaboration with 27four, a South African investment manager, has led a substantial investment of R550 million (28.7 Million USD) into the Divercity Urban Property Group. This investment is accompanied by reinvestment from existing stakeholders and serves as a significant boost to the company.
The primary objective of this financial infusion is to support the expansion of Divercity’s property portfolio and enhance its balance sheet. Carel Kleynhans, the CEO of Divercity, has highlighted the importance of this investment, underscoring its role in enabling the development of over 2,500 new apartments. Kleynhans also emphasizes the significance of showcasing Divercity’s positive impact and the commercial viability of its economically productive, sustainable, and empowering urban development model.
In South Africa, a significant portion of affordable housing is found on the outskirts of cities, far from economic opportunities and essential services. This spatial arrangement perpetuates the historical segregation from the Apartheid era and hinders various social, developmental, and economic progress.
Established in 2017 as a South African investment platform, Divercity is committed to offering affordable rental housing with accompanying amenities in densely populated, central urban areas. Mardé van Wyk, Principal at 27four, acknowledges the pressing need for quality affordable housing in South African cities. With great enthusiasm for Divercity’s innovative approach to addressing this ongoing challenge, 27four is proud to contribute to its expansion efforts.
The investment made by Proparco and 27four is in line with the government’s focus on enhancing affordable rental options to address the critical housing shortage. Additionally, it aims to combat the long-standing issue of spatial segregation in the country. A recent report titled “Growth Through Inclusion in South Africa” by Harvard University’s Growth Lab highlighted spatial exclusion as a significant hindrance to economic growth in South Africa, alongside challenges related to state capacity. To overcome these obstacles and drive economic growth in South Africa, the report recommends the development of densely populated housing clusters in proximity to business hubs—precisely the goal that Divercity is working towards.
The injection of R550 million in funding represents not only a boost in foreign direct investment for South Africa but also leverages the deep local expertise of 27four, a trusted in-country investment partner. This substantial investment is poised to impact the South African market significantly.
Gregor Quiniou, Principal at Pro parco, highlighted that this endeavor goes beyond rejuvenating South African cities; it also offers an opportunity to support energy-efficient building programs, focusing on achieving EDGE certification. This initiative aligns seamlessly with various development goals, including Sustainable Development Goals (SDGs) 5, 8, 11, and 13. These goals encompass various objectives, from job creation to addressing gender inequality. Divercity strives to provide safe and top-notch accommodations for its tenants, a demographic in which women make up roughly half of the tenant base.
