Sanlam Investments has launched a ‘Property Impact Fund’ – an equity investment vehicle focused on delivering affordable housing, student accommodation, rural and township retail, as well as education and healthcare.
Seeded with R1.4 billion, the fund targets a total asset base of R4 billion under management, aiming for returns of CPI + 9% per annum.
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The investment is offered through an open-ended fund structure, with a minimum commitment of R50 million required for participation in the investment-linked policy vehicle.
Kamogelo Leeuw, portfolio manager at Sanlam Investments, says the fund targets an investable opportunity set exceeding R2.9 trillion in property and infrastructure assets.
Despite South Africa’s infrastructure challenges, less than 2.7% of the country’s R5.8 trillion pension fund savings is invested in infrastructure.
Leeuw says many lower and middle-income earners lack access to essential social infrastructure. Government efforts tend to focus on the very poor, while private finance often overlooks this group.
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He cites the shortage of affordable, safe student accommodation near tertiary institutions as a clear example.
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“This impacts how future generations receive education, upskill and ultimately grow our economy. Similarly, in healthcare, the ‘missing middle’ should be able to receive quality medical care close to where they live, which also impacts productivity and quality of life,” says Leeuw.
“By investing in infrastructure, you plant a seed that lets the entire community flourish.”
The new Property Impact Fund by Sanlam Investments also aims to directly consider the needs of the lower-middle-income working class, including teachers, nurses, police officers and entry-level professionals, who make up 23% to 30% of the population, he adds.
Investing in growth sectors
The fund will target five high-growth sectors offering significant investment opportunities:
- Education – 1.2 million learners, with a 2.5% annual growth forecast linked to GDP, representing an opportunity of R129 billion
- Affordable housing – 3.7 million homes, with 2.5% price growth, representing R1.5 trillion
- Rural and township retail – 248 small and micro enterprises in the FMCG sector, with 10% annual growth in trading density, representing R900 billion
- Student housing – more than 600 000 beds, with 4.9% compounded annual growth, representing R150 billion, and
- Healthcare – 9.8 million medical-scheme beneficiaries, with 2.2% compounded annual growth, representing R200 billion.
The “missing middle” represents a large, stable demographic with unmet demand for quality services, offering both first-mover advantage and long-term tenant stability for investors.
Social infrastructure
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Sanlam notes that real estate in social infrastructure is expected to outperform traditional commercial property such as office and urban retail, as rising middle-income demand drives new development.
It says investors will gain immediate exposure to a portfolio exceeding R800 million in impact property – generating competitive returns.
The fund follows a two-part strategy:
- Partnerships by working with experienced joint-venture partners who share aligned commercial and social-impact goals; and
- Data-driven deployment – using geospatial analysis and infrastructure data to identify underserved areas
“This spatial intelligence enables us to pinpoint communities where capital will have the greatest socio-economic impact,” says Leeuw.
“Our property investment team has consistently delivered higher returns with lower volatility than listed property or equity markets over the past five years,” he claims.
Each project will be evaluated for its contribution to inclusive growth, job creation and environmental sustainability.
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