Getting into the headquarters of JHC, the Johannesburg Housing Company, is like breaking into Fort Knox, with access control devices on myriad doors. In fact, as we pass through the last door, I realise it actually is Fort Knox– at least according to its name plate.
The man at the centre of this African fort is Taffy Adler, JHC’s chief executive. And JHC’s objective — to help urban regeneration through the provision of decent, affordable accommodation within the Johannesburg CBD — could not be more dissimilar to its office’s American namesake. Last year, the company was recognised with a UN Habitat award for innovative and sustainable housing solutions.
“We own 24 buildings in the CBD, all of which are mixed income. Twelve percent of units cater for people earning less than R1Â 500 a month, and 50% are for people within the government subsidy band of R3Â 500 or less,” Adler explains. Since 1997, JHC has added 8% of stock to the existing rental accommodation in the city, or 2Â 809 units.
Today, JHC is a provider of preference. A property price report released this week showed that purchase and rental demand for low- to middle-income property is at all-time highs, with stock difficult to find. “We’re completely full. Every month, about 50 units become available and they’re taken up immediately. We are at 100% occupation. Our rental arrears are below 3%, they have never been above 5%, and currently they are at 2,7%.”
JHC currently covers all operating costs from its income, and targets all buildings for surplus profit. It has a 12% return on investment on its portfolio as a whole, which is small compared to commercial investors who target at least a 20% return. Government subsidies on most of its buildings help to keep rentals low.
In the beginning, JHC only ventured into areas considered too risky for normal commercial operators. “We proved the risk could be minimised if you treat people properly, as clients, and institute a service culture,” he says. “This has gradually become the norm.”
JHC ensures that its buildings are properly maintained, with running water, electricity and the building’s appearance priorities. That’s become a trend, remarks Adler, with other landlords following suit.
Most of its buildings have been refurbished, but JHC has also built “four or five developments” including the Brickfields development in Newtown, which Adler is clearly proud of. “We’re building to last. We look at a 20-year life cycle costing, where a developer builds to sell. That means we put in more money upfront, in order to spend less later,” he says.
The interest in Brickfields has been so great that the company has kept one unit as a show unit for visitors. “We took a derelict site and created something entirely new — a residential community — which is exactly what is needed in the CBD. It’s the first high-rise development since Ponte — which was built 30 years ago — for residential accommodation, so people had to dust off their skills in [that field]. The question was, how do we design so it is affordable to mixed-income residents? We experimented with lofts, by which I mean adding mezzanine floors, to give residents more space. In our other designs, we experimented with facebrick, rather than paint and plaster, as being more reliable,” Adler says.
In some ways, JHC has been a victim of its own success. As one of the first investors in a dilapidated inner city, it was able to leverage low prices to its own advantage. Now prices have risen dramatically as the regeneration’s achievements became more visible. The Landdrost Hotel was bought for R3-million and the upgrade and conversion into 240 units cost R14-million, “so R17-million altogether”. Each unit cost just R55Â 000. Cresthill, bought eight years later, cost R17-million for its refurbishment alone, with each unit costing R100Â 000.
Adler points out that, although JHC is probably the city’s biggest provider of social housing, it is not catering for the poorest of the poor. Residents of derelict buildings run by slumlords pay between R200 for part of a room and R600 for a single room, often without water or electricity. “Those people are the most vulnerable. Those who are paying R600 plus, we could probably accommodate. We charge between R600 and R750 a month for our rooms, which are much more secure and better serviced. But the people paying R200 require a special effort from government.”