May 19 2025 15:30
SOUTH AFRICA
Management is optimistic that JSE listed Balwin Properties, South Africa’s largest section title apartments developer, will continue its momentum into its end-February 2026 financial year.
CEO Steve Brookes said Balwin could shine in the coming months. The group released its financial results for the year to end-February 2025 last Monday May 12. Balwin’s share price had climbed 5.56% on Monday May 19 to R2.09 by 15:10.
“The year under review was a tale of two halves, with a strong recovery in profitability in the second
six months of the year, supported by three consecutive interest rate cuts of 25 basis points each since
September 2024. This was supported by ongoing cost saving initiatives and a strong performance
from the Balwin Annuity,” said Brookes.
Revenue for the period was 6% lower than the prior financial year at R2.2bn on the back of 1 749
apartments handed over, compared with 1 892 apartments recognised in revenue in the 2024 financial
year.
As many as814 apartments were pre-sold for future financial periods, a significant increase on the 520
apartments pre-sold in the prior year, mostly because of strong buyers’ interest in the second six
months following the reduction in interest rates in South Africa.
Notwithstanding the contraction in number of apartments handed over, the group reported an 8%
increase in profit for the year to R234.0m, supported by cost reduction and solid contribution
from the group’s annuity business, according to Brookes.
There were numerous revenue generation and cost engineering initiatives highlighted by the group. Land at Mooikloof Smart City was sold for the construction of a shopping centre for circa R46m. This formed part of Balwin’s strategy “to identify and dispose of smaller land parcels for complementary developments that will enhance the overall lifestyle and convenience factors for prospective homebuyers and investors”, the group said.
The rate of construction of apartments would be reduced to match the rate of sales to preserve cash flows. There would be active management of the operating cost base in response to the subdued sales activity. Brookes said construction costs would be managed “prudently without compromising on quality standards”.
Sales incentives would be toned down in the current 2026 financial year, with demand for one- and two-bedroom apartments remaining strong, comprising 74% of total sales.
Balwin Annuity increasing revenue by 33% to R178.0m from a low base, while doubling net profit after tax to R43.2m, up from R19.7m in the prior year.
The group’s Fibre and Connect business contributed R69.2m to revenue and R10.5m in net profit. Balwin’s Head Office generated net profit of R13.2m, boosted by “a positive revaluation gain, advertising revenue and leasing income”.
Green Living, which includes the group’s solar interests, posted R23.4m in revenue and R4.4m in net profit, reflecting growth in solar infrastructure gains, while “mortgages also delivered meaningful
contributions” according to Balwin. Other annuity businesses reported a performance with a combined revenue contribution of R30.1m and R12.8m in net profit respectively.
Demand in the Western Cape was strong while the city faced a housing shortage, with land contracted for two new developments during the period as replacement projects for Fynbos, which was sold out, and De Aan-Zicht. As much as 99% of apartments brought to market in the province were recognised in revenue, driving profitability. As many as 801 apartments were handed over during the financial year, down from 947 on the back of developments selling out. The region’s revenue contribution was stable at 45%. Gauteng regained its position as the top contributor to revenue with 856 apartments recognised, with 2024 at 732, boosting its share of total revenue to 47%, up from 37% in the prior financial year. These
sales were supported by the resumption of construction at The Whisken in Kyalami, following town
planning delays, Brookes said.
Developments under construction, which included the cost of land, infrastructure costs, development
rights as well as construction costs increased by approximately R337m to R6.7bn at year end. This increase was driven predominantly by the investment in two developments in the period for
new projects in the Western Cape.
Operating costs for the year remained flat at R351m, while the gross profit margin showed improvement to 30%, up from 28% in the prior year to record a gross profit of R672m, supported by the performance of the Balwin Annuity. In line with its sustainability objectives, all new developments undertaken by Balwin Properties are aimed at achieving EDGE (Excellence in Design for Greater Efficiency) Advanced ratings. An initiative by the International Finance Corporation, the group has to date certified a total of 27 162 apartments with the IFC’s EDGE tool.
The company’s dedication to sustainable practices extended beyond individual apartments. As many as 11 of Balwin’s lifestyle centres have achieved six-star Green Star ratings by the Green Building Council of
South Africa, all of which have been accredited with Net Zero Carbon ratings, affirming their ability to
generate and maintain a net zero carbon footprint. Balwin’s head office at 105 Corlett Drive has
received a 6-star Green Star rating, Net Zero Carbon and Net Zero waste rating, bringing the total NetZero certifications to 12. Balwin secured 1 465 green bonds for home buyers during the period.
The Group closed the year with a cash position of R254.8m. Its loan-to-value remained
consistent with the prior year at 40.4%.
“Despite the current protracted cycle of global and domestic economic uncertainty, I believe that
our core business remains strong with sustained demand for residential apartments. We have a
strong brand and never stop innovating, which allows us to also grow alternative, annuity-based
income streams,” said Brookes.
“We’re emerging leaner, and more focused from this cycle with significant strides made in
optimising operational and development-related costs, which will over time reflect in increased
gross and operating profit margins, which in turn will support a higher return on capital invested,” he said.
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