Steve Brookes, the Chief Executive of Balwin Properties, joined the BizNews Power Hour to discuss Balwin’s performance over the last year and the way in which it was affected by the suspension of construction for three months due to the Covid-19 lockdown in 2020. Brookes, who is fiercely passionate about ‘going green’, explained the eco-loans offered to clients buying a Balwin property. He believes that ‘green is going to be the legacy that he leaves behind’. – Nadya Swart
Steve Brookes on whether Balwin Properties would have beaten their headline earnings per share of 88c (of the previous financial year) had construction not been suspended for three months:
I’m confident that we would have beaten it. I’m not a crystal ball gazer, but these obstacles were put in our path and I think our management has still achieved exceptional results in a bloody difficult year. It’s been a difficult year for everybody.
On demand and price elasticity:
We’re very blessed. We’ve got a fantastic pipeline of 62,000 apartments and [they are] very geographically in the perfect spots in Johannesburg, Cape Town, KwaZulu-Natal, and Pretoria or Tshwane. So that makes a massive difference. As you know, in property, it’s about location, location, location. And then each project has a set amount of sales that it has to achieve. So, as you said previously, it’s a very simplistic business.
On the way Balwin’s eco-loans work:
So, as you know, I’m fiercely passionate about green and I believe it’s going to be a legacy that I’m going to leave behind in this world, and I’m trying to make this world a better place. In Balwin, every single apartment is EDGE-certified and every one of our lifestyle centres – we’ve done four now – are six-star grade, which is an exceptionally high grading. I approached the IFC through the EDGE-certification, and we were the first people in the world to come up with a concept of linking green in residential buildings to a direct financial benefit for the client.
We worked extensively with Absa. They were the first ones that we approached and we did a fantastic reduction in mortgage if the building is green-certified. And now all the other banks are following suit and very soon we’ll be able to announce that when a client comes and buys one of our apartments – no matter who they bank with – we can get a reduction of the best rates and mortgages. And I believe that is a fantastic benefit to a client buying a Balwin apartment.
On why the Wedgewood development in Sandton was canned:
We’ve got a fantastic risk assessment in Balwin and we’ve set up a brilliant Ex-Co committee and a transaction committee. The bottom line is that we just felt the risk was too high for a single moment – in other words, for a building that gets built in one hit. And we also found that the clients were struggling to commit to a product that was only delivered in two and a half years time. So unfortunately, we analysed the risk and we did not continue.
On Balwin’s future prospects:
The two things that keep me awake at night are the interest rates and then the political and macro environment. So, if interest rates keep where they are and the politicians start governing this country correctly, which flows for us right down to the municipalities, then there is a huge runway. We’ve got a land bank of 62,000 apartments. You know, you can do 4,000 apartments – we’ve got enough land for an excess of 15 years.
So, the future looks bright. You know, if the politicians play the game and interest rates stay where they are – then I think there is a bit of pent-up demand coming as Covid, hopefully, starts negating.
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