Residential property developer Balwin Properties has achieved a solid financial performance in the year ended February 28, with headline earnings a share and earnings a share up by 7% to 141c.

The group’s profit for the period improved by 18% year-on-year to R661-million, while revenue rose 30% to R2.7-billion.

A final dividend of 31c was declared, which represents an 18% increase on that of the prior year.

Work in progress increased by 50% compared with the prior financial year, which was attributed to the acquisition of land for future developments. Acquisitions during the financial year included obtaining the development rights of the Waterfall properties in Gauteng. The total value of the developments acquired amounted to R1.5-billion.

As at the end of the period, Balwin has a cash balance of R547-million owing to the effective management of working capital.

“Balwin has produced excellent results despite the challenging macro-environment characterised by political volatility, strict mortgage lending, rising consumer inflation, low household disposable income and lower-than-expected gross domestic product,” CEO Stephen Brookes told Engineering News Online on Monday, stressing that Balwin had delivered what was promised in the prelisting statement. 

“We have delivered an excellent performance underpinned by our high-quality, affordable product offering, coupled with exceptional project cost management. The fact that we operate in diverse locations across high-density urban nodes ensures the sustainability of our business and ability to create shareholder value,” he said.

DEVELOPMENTS
Balwin had 13 developments under construction during the period and sold 2 711 apartments at an average selling price of R995 000 a unit.  Solid demand for the apartments was sustained, with 1 283 apartments presold for the 2018 financial year.

The group has a secure pipeline of 33 786 apartments across 24 locations in the key target nodes of the Western Cape, such as in Somerset West, and in Johannesburg and Pretoria, in Gauteng, with ten-year development horizons.

Brookes stressed that the company’s success is based on a continuous development approach, which is to sell 20 to 25 units in each location, per month, to maintain price tension in the market, as well retain artisanal expertise across sites. 

While the results noted the group targeting a profit margin of between 35% and 40%, Brookes noted that he would aim to increase this to between 40% and 45%.

“Our developments continue to be in high demand. [Several] first phase developments were launched during the review period and have experienced strong sales,” he said, adding that it was encouraging to see that the latest developments launched near year-end sustained demand and were achieving record presales figures despite economic uncertainty.

Greenstone Crest, in Johannesburg East, and De Velde, which was Balwin’s first development in the Western Cape sold out during the period. 

Balwin launched six new developments during the financial year, including Malakite and Amsterdam, in Johannesburg; Grove Lane and The Blyde, in Pretoria; The Sandown, in the Western Cape; and The Polo Fields, Balwin’s first development in Waterfall.

Brookes noted that presales at Westlake and The Sandown have been pleasing, reaching more than 25 and 30 apartments a month respectively.

All Balwin estates are built to a standard specification, comprising a unique Balwin design, standard finishes, no customer changes, and in not more than four-storey blocks with ten apartments per block, allowing the group to benefit from significant economies of scale; however, Brookes noted that the best model is the three-bedroom and one- and two-bedroom apartments.

He added that demand for one-bedroom apartments is exceptional, provided the smaller apartments are well-designed, constructed and finished.

Several developments, launched post year-end, have all experienced significant demand, with the first phase of The Jade in the Western Cape largely sold out. 

Further, the Whisken in Johannesburg North experienced more than 130 presales, while Kikuyu, Balwin’s first development in Waterfall Fields, achieved more than 200 presales.

The Polo Fields, which was launched in February, achieved more than 300 presales. The first phase is expected to be handed over in August this year.

“The Waterfall node we see as an enormous attractive proposition going forward. It is a significant growth node, with the likes of major corporates establishing offices there,” noted Balwin CFO Jonathan Weltman.

NEW RENTAL MODEL
Balwin will also shortly announce its rental model, where the group is targeting three projects, including Green Park, in Boksburg which will be the first rental development; land in Linbro Park; and land in Pretoria.

Brookes noted during the developer’s results presentation that Balwin Properties has about 5 000 apartments that would go into the rental model in future.

“The business is good and we believe the rental business will add a sparkle to it,” he said.

INNOVATION
With the company continually seeking innovative initiatives to differentiate its product, it has invested in the addition of a Crystal Lagoon at The Blyde, Balwin’s first development in Riverwalk.

This will be the maiden Crystal Lagoon in sub-Saharan Africa and offers buyers a one-of-a-kind lifestyle. Development of the lagoon is on track and is expected to be completed in December.

“These initiatives are what gives us an edge over our competitors and drives demand for our apartments,” added Brookes. 

KZN EXPANSION
In line with its strategy, Balwin has acquired land in Ballito, Durban, which marks its entrance into the KwaZulu-Natal housing market.

The land can accommodate more than 2 500 apartments, which will be developed over an eight-year period. Development is expected to be launched during the current financial year, with the first apartment planned to be handed over in the first half of the 2019 financial year.

Balwin has also opened an office in Umhlanga to start operations and has appointed Anthony Diepenbroek to manage the division. 

Balwin aims to acquire further land for development, as part of its medium-to long-term growth strategy.