Balwin projects ‘on track’
A number of developments under construction in Joburg, says CEO
Balwin Properties CEO Stephen Brookes says the group is still seeing strong demand for the apartments it builds and sells, despite a recession and poor trading conditions.
The group said in a pre-close operational update for the five months to July that almost all of its projects were being built on schedule. The share price closed 2.19% higher at R7 on Tuesday.
Brookes said: "Balwin continues to receive strong demand for its high-quality apartments, with pricing and sales volumes tracking in line with the previous comparable period."
The sectional title developer said that costs incurred during the period increased as a result of gearing up of resources for the delivery of its increased pipeline including developments at the Waterfall node.
The creation of a procurement department that centralises Balwin’s procurement process, had started to lead to "significant efficiencies and cost savings in the business", said Brookes. "Encouragingly, the recent interest rate cut should support a traditionally stronger second-half performance."
Last week, Balwin announced it had formed a strategic alliance with listed residential property owner Transcend to create 8,900 affordable rental apartments worth R6.4bn. This will cover five developments in key Gauteng nodes over the next six years.
Looking at Balwin’s pipeline, Brookes said the group had six developments under construction in Johannesburg. One of these was the Whisken development in Kyalami, which had been "paused".
Brookes said: "The council has instituted legal actions relating to the Whisken development and major construction has been paused. Because it is sub judice, we cannot provide more detail at this point in time, but Balwin is looking forward to resolving the issue amicably."
Garreth Elston of Golden Section Capital said Balwin had released a positive pre-close update. "The company is still showing strong demand for its developments. Construction and delivery schedules are on track, and we are positive on the strategic alliance with Transcend. The only areas of concern are the reported increase in costs, as well as the delay being experienced in Kyalami.
"Neither of these appear to be significantly negative at the current time," he said.