Affordable segment funds target net income yields of 9% or better with inflation-linked escalations, translating to total returns of CPI plus eight alongside measurable social impact in a country lacking over three million adequate homes.
Residential property remains materially underrepresented in institutional portfolios.
That is the South African multifamily paradox: pension fund members are already supporting one of the most resilient income streams in domestic property as tenants, while their retirement capital remains largely absent from the opportunity, writes Shaila Desai, head of the Old Mutual Residential Impact Fund, in an article titled "The growing case for multifamily residential in South African property portfolios".
She says that somewhere in Johannesburg tonight, a 30-year-old professional will pay rent to an institutional landlord and live in a professionally managed residential development, while their pension fund has little or no allocation to the asset class they are helping to sustain.
According to Desai, the allocation gap is stark. She says in the MSCI South Africa universe, retail accounts for 61% of roughly R410 billion in institutionally held property, while multifamily residential accounts for just 6%.
