Cosmo – the future of property in SA

Developers of the mixed-income, mixed-race suburb of Cosmo City north of Johannesburg are feeding frenzied buyers piecemeal.

Another 500 houses come up for sale soon and judging by experience, they won’t be on the shelf for long.

The 1 200ha development, which will comprise 13 800 households in a walled off area, is revolutionary in trying to realise government’s vision of mixed suburbs.

There is an “RDP” section comprising houses given away by government not far from middle and even upper-middle class dwellings.

About 200ha have been earmarked for parks and conservation areas. There will be a park within ten minutes walking distance from any given point, complete with playground equipment, basketball courts and thatched lapas. Sections of indigenous trees and bulbs have been fenced off and game will yet be introduced.

You could call it a poor man’s Lonehill.

“Cosmo City is the first property development in the country where families from mixed incomes can live together. The project has many unique aspects and the council has planned the project extremely well”, noted Theo Hardiman from M5 Housing, Cosmo City’s property developers.

The total value of the project is approximately R3bn and extends 6km from one end to the other – it is going to be a fully-fledged town, he added.

There are three categories of homes – 5 000 low-cost subsidised units, 3 500 “finance-linked” houses, which are partly subsidised by the State, 3 300 “bonded” units, with which there are no income restrictions and 1 000 “institutional” apartments for renting.

A further 100ha has been set aside for 32 commercial and industrial sites, which are to be sold on the open market. “Light industries have already started snapping up land near Cosmo City, which provides ideal job opportunities as workers can walk to work”, enthused Hardiman. More than 3 000 people are employed in the construction of Cosmo City.

Demand for houses outstripped supply from the beginning. As a result, developers decided not to sell all the units until they were nearer completion. Since building started, 300 families have moved in to their bonded homes and currently, 1 500 units are under construction.

The value of the properties has soared, allowing homeowners to use the increased equity in their homes to add on a garage or put up a wall.

The bonded houses were priced from R275 000 and the highest selling price so far has been R675 000.

Properties bought for around R240 000 late last year are now selling for more than R300 000. Speculators are thought to have contributed to this appreciation, which could be seen as defeating the purpose of affordable housing, but just as many buyers who plan to live in the development have also been buying.

The 5 000 low-cost subsidised units, will be allocated first to people from the informal settlements of Zevenfontein and River Bend. Only families that earn less than R1 500 per month will qualify for these units.

More than 1 200 families already have a home to call their own. The developers plan to add 250 families per month. More than 600 000 names are on the waiting list for the fully subsidised units.

The 3 500 “finance-linked” units for households earning from R3 500 to R10 000 are partially subsidised. Buyers can apply for financing to fund the balance. Individuals earning more than R7 000 are required to put down a deposit.

Through the 702 FNB Housing Initiative, 702 houses will be made available to successful applicants who have qualified for a mortgage bond from FNB and a housing subsidy, granted by the Department of Housing. In addition, mortgage bonds over the 702 units will be fixed at 10,5%pa for the first five years of the loan.

“We are committed to helping the country overcome the housing shortage at the lower end of the market and we will do our best to provide finance for developers to build the thousands of houses we need,” said Iris Dempsey, FNB commercial banking CEO.

The bank has set aside R200m in end-user finance to enable the people of Cosmo City to own houses and a further R170m has been made available to developers for the construction of the units.

M5 Housing, in a joint venture with Phuma Developments, is responsible for the planning and development of the housing units. Basil Read will manage infrastructure development and construction for the rest of the project.

The groups will ensure that, when completed, Cosmo City will be a thriving town with 15 schools, three petrol stations, 40 churches and clinics, several libraries, a police station, public swimming pool, sports fields, tennis courts and taxi ranks.

In addition, the whole of Cosmo City will be fully serviced with water, electricity, sewerage, storm water and roads, including street lighting. All units are equipped with prepaid electricity and water metres.

The project is ironically being built on the land of conservative icon, Robert van Tonder, who led the Boerestaat party. The organisation was founded in 1986 to fight for the restoration of the Old Transvaal, Northern Natal and Free State Boer Republics.

As luck would have it, the old van Tonder family home is now the Basil Read site office.

Cosmo City offers a multi-racial environment where children can grow up together without the discrimination of income, race or religion.

The cosmopolitan nature of the development seems to have been lost on the body responsible for the street names. The main route, South Africa Drive is aptly named but roads like United States of America Boulevard, Las Vegas Crescent, Tennessee Street and Kentucky Avenue seem a bit out of place. There is also Tanzania Avenue, Luanda Street and Kenya Crescent.

Article by: Gaylyn Wingate-Pearse - www.moneyweb.co.za