Property Flash


Balwin Properties’ revenue jumped 20% year-on-year in the six months to end-September thanks to improved sales. The company which is the largest developer of sectional title apartments in South Africa managed to pull off a very strong six month performance as customers flocked to buy its products.

“Despite rising interest rates and a constrained economy, client demand for our apartments remained strong and sales recognized in revenue closed up 8% for the period at 1 360 apartments. This was driven primarily by semigration to the Western Cape and our unique lifestyle offering with a focus on green living,” said chief executive Steve Brookes.

“We are also encouraged by the 1 551 apartments forward sold but not yet recognized in revenue, which will support growth in the next six months and beyond,” he said.

Balwin recorded revenue of R1.6bn, a 20% increase on the R1.3bn reported in the prior interim period. Profit for the six months was up 48% to R173m, compared with R117m for the comparative period. The higher revenue and profit numbers were primarily driven by higher sales volumes of apartments handed over and improved profit margins respectively.

Balwin’s gross profit margin increased 2% to 26% in the first six months of the year, as a result of focused cost containment measures together with more robust pricing on the sale of early phase apartments.

“Our strategy of reducing the yield curve between the first and last phases of a development is gaining traction and is especially noteworthy on the back of the high-cost increases in the construction industry during the period.  Demand for our apartments allowed for some elasticity in selling prices, however, the team put in a huge effort to limit cost increases through effective cost engineering and concentrated cost containment, supported by our in-house procurement department,” said Brookes. 

The group’s net asset value per share increased to 771.39 cents compared with 692.00 cents in the prior corresponding six month period, while earnings per share and headline earnings per share increased 48% to 36.88 cents and 47% to 36.63 cents respectively.

Balwin had R581.2m in cash at period end. Revenue from Gauteng represented 47% of total revenue from the sale of apartments, having represented 60% a year ago. Coastal regions now made up the balance of 53%, rising from 40% a year before. Similarly, the contribution from the KwaZulu-Natal region increased to 21% of total revenue from 10% in the comparative period, mostly as a result of apartments handed over at Izinga Eco Estate in Umhlanga, KwaZulu-Natal, for which no apartments had been handed over yet in the prior comparative period.

The Western Cape made up the balance of 32% of total revenue from sale of apartments, up from 30% in the comparative period. The changes in revenue contribution from sale of apartments by region were mostly driven by semigration, which had a positive impact on both the number of apartments and selling prices achieved in the coastal regions.

Munyaka, Balwin’s premium development in Waterfall in Midrand, recorded the highest number of apartments in revenue of 170, slightly down from 192 a year ago, a continuation of strong demand for apartments in the Waterfall City and following the completion and handover of the final four apartments at neighbouring Kikuyu.

Brookes said sustained demand was also recorded at Greenbay in the Western Cape and Greencreek in Tshwane East, supporting the continued demand for the Green Collection developments. Thaba Eco Village, De Aan-Zicht and Izinga Eco Estate recognised a combined 319 apartments in revenue during the first six months of the current year.

Greencreek, Tshwane Lifestyle Centre

Balwin has a secure development pipeline of 45 411 apartments across 27 developments in key target nodes. This represents an approximate 15-year development horizon.

Balwin’s annuity business which provides fibre infrastructure and other services continued to gain traction and would make an increasingly meaningful contribution to group’s earnings over time, Brookes said.

Annuity contributed R37.9m to group revenue during the period, an increase of 80%. Fibre and bond origination remained the mainstay of the annuity business.

“From an operational point of view, Balwin remains well positioned despite increasing headwinds and a rising interest rate cycle, with 1 551 apartments forward sold and sustainable demand for our brand. Where necessary, we will support apartment sales with short-term incentives and longer-term loyalty programme,” said Brookes.

An interim gross dividend of 9.9 cents per ordinary share was declared, up 34% from 7.4 cents per share for the comparative period.

Pictures supplied by Balwin Properties

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