CDC Group has committed $36m to Divercity Urban Property Fund (Divercity), an affordable housing platform focused on the regeneration of South African cities.

This transaction was also funded by South African impact investor Futuregrowth and existing Divercity shareholders. 

This investment will fund the construction and management of more than 2,500 new residential units over the next five years predominantly in Johannesburg.

It will provide quality, affordable and environmentally sustainable housing for low and middle-income households in well-located but underinvested neighbourhoods in major South African cities.

Construction of the new residential units will help address the growing housing deficit and issues of spatial segregation in South Africa, meeting the needs of people with limited other housing options available, including women, single parents and young families.

Up to 4,000 construction and permanent operational jobs are expected to be created, resulting in new economic opportunities, and boosting employment. 

Divercity has also acquired its residential property and asset manager, Ithemba Property, that has a 20-year track record in managing affordable rental housing.

Through the creative design and structure of this platform by investors CDC, Ithemba and Atterbury - Divercity will be underpinned by market leading property development and asset management expertise in rental housing which will be a competitive differentiator.

Samir Abhyankar, Managing Director, Head of Direct Private Equity, CDC Group, said: "Cities in Sub-Saharan Africa are experiencing rapid population growth as an increasing shortage of housing units with low income populations being particularly affected. With our re-entry as an equity investor in South Africa we are proud to have partnered with Atterbrury and Ithemba to set up Divercity as a leading affordable and sustainable housing platform in South Africa. The investment will help promote inclusive growth and enhance social and economic integration in the country. CDC’s patient capital and development expertise can help accelerate growth, improve living conditions and support the livelihoods of low-income and vulnerable households.”

With investment in Africa’s housing sector constrained, CDC’s countercyclical funding can stimulate local housing markets and drive transformative economic, inclusive and sustainable impact in South Africa and other African countries.

Ilaria Benucci, Head of Construction and Real Estate, CDC Group, said: "Urban population growth and a challenging macroeconomic environment necessitates patient and long-term investments that will help close the gap between demand and supply in South Africa’s housing market. We are delighted that our investment in Divercity will support the developer to deliver rental housing that will meet the housing needs of groups within the low- and middle- income bracket. We are confident CDC’s investment will have a demonstration effect on commercial investors, ushering in greater investment into the housing sector."

Carel Kleynhans, CEO of Divercity, added: “We are delighted to welcome CDC to the Divercity partnership. I am confident that they will add significant value to the funds’ goal of changing the face of affordable rental housing in South Africa and establishing it as an investment grade asset class.”