SA’s Build-to-Rent Housing Models

As part of my master’s thesis last year, I explored the relevance and applicability of built-to-rent (BTR) models as a vehicle for the private sector to play a role in solving the urban housing crisis in the greater Johannesburg area. This study included key informant surveys with industry experts, building a realistic financial feasibility model, and the conceptualization of a framework for implementing BTR in Johannesburg. The following are some key observations that property practitioners can act upon, as well as other ideas that have evolved out of my continued exploration of BTR as an emerging asset class.

For the purposes of my study, I defined Build-to-rent housing as; A long-term rental housing product allowing residents to sign leases for a period of up to fifteen years. It is purpose-built and operated by specialists on behalf of reputable institutional owners, therefore offering greater security of tenure and additional free amenities. BTR differs from private rental stock, (PRS) in that PRS homes are built in a manner that these could be sold off to individuals into the open market. BTR on the other hand is meant to be kept under the ownership of a single institutional owner. Meaning they are often sold by one institutional owner, to another. BTR is also purpose built with carefully selected finishes and importantly, it is bundled with free or discounted additional amenities such as on-site daycare centres, business centres, flexible office space, additional storage and gyms. In South Africa, companies such as IHS and Balwin are well-known developers of PRS-type housing. BTR also differs from social housing, as it has been known in South Africa, in that the homes are privately owned with no government subsidies and are privately and professionally run with a key focus on hospitality. This focus on hospitality is what ensures that residents stay in the BTR homes for longer.

Over the past 20 years, BTR housing as an asset class has seen exponential growth in the US, UK, EU and Australia. In some European markets, BTR is typically a high-end product based on strong branding, opulent finishes and a unique living experience. BTR can also be built to appeal to the middle-income market as is seen in the US, Australian and other European markets. South Africa has often been the trailblazer in terms of adopting innovations and it is a near certainty that BTR will be mainstreamed as a housing asset class in South Africa first and then to other African countries. Factors driving this impetus include the market saturation of retail and office park developments. This was a phenomenon already observed in most cities in South Africa which has been amplified by Covid-19 as remote working arrangements have left many office parks vacant. This means institutional investors will be in search of alternative long-term assets to invest in. BTR proved to be the next logical evolution in the aforementioned markets, and the trend is likely to follow in South Africa as well, especially where BTR is championed by professionals such as the team at Similan. Lastly, the evolution away from the need for ownership, to long-term, reliable access will soon upend the current paradigm where individuals and families wish to purchase a home in order to feel they have ownership of it. As was demonstrated through the success of a company such as Uber, if it makes financial sense, and there are high levels of security of tenure, South Africans may soon be content with a ten or fifteen-year lease instead of the expense of paying a mortgage and maintaining a residential property.

In terms of my study, I will start by stating, gladly and upfront, that BTR is in fact a viable affordable housing alternative that can be implemented in Johannesburg, within the framework of the existing legislature and human settlement policies. Importantly, the study revealed that BTR for a South African market would have to be tailored into a uniquely South African iteration and may not necessarily hold the exact same characteristics as the multi-family homes in North America or BTR in the UK, Europe, and Australia. There are many unique modifications to the classical BTR model that would need to be implemented. One example is the fact that a South African BTR model may not necessarily be funded by a single institutional owner, but may have to offer equity to multiple institutional funders, including private developers. This is especially true for the pilot projects until multiple proofs of concept exist that put potential investors’ fears at rest.

The study also revealed that there would need to be buy-in from all spheres of government in order to allow efficient processing of town-planning applications for example. This is because many of the structural and functional features of a BTR housing development are innovative, novel, and beyond the norm of what may already be on the market. The national government of South Africa has in place excellent policy documents, a full compendium of which can be accessed from the site below, courtesy of Wits University.

What is clear from the vision set out in the National Development Plan and the rights to shelter as envisioned in the Bill of Human Rights, is that the ground has already been laid for both government agencies and private sector developers to innovate in order to realise the vision of access to adequate housing for all by the year 2030, as set out in the UNDP’s Sustainable Development Goals. It is therefore my opinion that it is up to the private sector to go beyond shying away from building affordable housing – due to the hurdles of low profit margins – and to innovate beyond that and develop profitable, socially responsible solutions. Through the models of BTR developed by the team at Similan Consult, of whom I am a part, it is entirely possible to professionally develop a profitable, affordable BTR model for Johannesburg and other South African Cities.

So what is the secret to this winning formula? Without giving away the entire recipe to the “secret sauce” I can say the following; Firstly and most importantly, it takes a team of development management professionals such as the team at Similan Consult, to purposefully specialise in the conceptualization, design, building and operation of BTR housing products. This is necessary because there are many, seemingly counter-intuitive features that make up a BTR housing product that, absent the correct knowledge and experience, are impossible and bothersome for the average property developer to get right. What do I mean by this? Well, BTR must necessarily be built with green technology because the long-term savings are what make the long-term rental model profitable. Such green technology can yield crucial energy and water savings. Having said that, it takes a specialist skill to be able to build such technology into a housing product with minimal initial cost impact. Building green has always been synonymous with being more expensive, but is it?

In follow-up articles, We will unpack more of the potential avenues that BTR can open up for the South African market. Such as the many opportunities presented by Covid-19. This includes the ubiquitous vacant office parks across Johannesburg. Some of these buildings are well located, with suitably-designed existing structures that minimise BTR conversion costs. Some conversations will centre around approaches to de-stigmatising low-cost, long-term rental housing in South Africa. Other conversations will centre around the drive towards Environmental Social and Governance (ESG) investing and how BTR is the perfect vehicle for institutional capital seeking to make a tangible, measurable impact in the urban housing sector.

I welcome your comments and questions on this subject and urge you to visit our website on In conclusion, I would like to share my recently-published, peer-reviewed conference paper. This paper is a first step in starting a conversation about how exactly to roll out South Africa’s first BTR housing projects. It is a conversation that requires inputs from all stakeholders in the housing sector as I alone do not have all the answers. It is a starting point we can all add and grow from. I truly believe that the only way to address housing shortages in urban South Africa is through the participation of the private sector in the provision of affordable housing. We as the Similan team, also believe this can be done profitably, and are walking the talk by doing just that. Please read through the conference paper at the link below and feel free to reach out to me with your thoughts at

Author: Kushinga Kambarami