Unravelling the Contextual Specificities of Affordable Housing Reits in South Africa

Abstract

Real estate investment trusts (REITs) have spread from the US since the 1960s, with greater speed following the global financial crisis. In South Africa, REITs have been in operation since 2013. Most of the 36 locally-listed REITS focused on commercial, industrial and retail property, with only a modicum of residential investment, primarily in the ‘affordable housing’ space (rental properties for lower middle-class residents, some upper working class, and student accommodation). In 2024, two of the remaining 27 REITS retain these portfolios, despite the high demand for affordable housing. In this paper, we explore the historical trajectory of the four ‘affordable housing’ residential REITs in South Africa between 2015-2023 using firm-level, documentary and spatial analysis. Delving into their histories, ownership, investments, performance, geographies and strategies, we demonstrate the contextual specificities of these four REITs. In conversation with a growing, largely Northern-focused critical theoretical literature on residential REITS and rental housing financialization, our analysis reveals how South African affordable rental housing financialization is heavily embedded within local capital markets with established local institutional investors and real estate actors that share longer histories of investment in affordable housing. These REITs’ capacities and limits are critically shaped by declining national political-economic conditions, unreliable municipal service provision and particular historically-specific built environments that facilitated asset accumulation in the first place. In response to financial constraints, these REITS have scaled up through mergers and shifting geographies of investment across inner cities and suburbs slowly reconstituting the geographies of affordable housing.