Public investment organisation the Public Investment Corporation (PIC) has made a strategic investment in affordable rental housing company Divercity Urban Property Group to enable further growth in affordable housing by supporting Divercity's ambitions to develop an additional 2 500 rental units.

This partnership aims to address South Africa’s critical housing shortage by delivering high-quality, well-located affordable housing, the PIC said on January 24.

The PIC made the investment on behalf of its client, which also marks the organisation’s first investment in the multifamily residential rental sector.

“South Africa faces a critical housing shortage and the PIC is committed to investments that not only deliver sustainable financial returns to its client portfolios, but also that drive impactful socioeconomic outcomes in the country,” said PIC chief investment officer Kabelo Rikhotso.

“Our partnership with Divercity aligns with our mandate to support economic transformation and upliftment by creating accessible, quality affordable housing in strategic urban locations. By investing in the multifamily rental sector, we are contributing to a resilient, inclusive housing market that offers real value to South African communities and to our stakeholders,” he said.

Multifamily refers to residential rental properties such as apartment buildings that are owned and managed by institutional landlords.

Recent research sponsored by Divercity, financial services firm Absa and the South African Multifamily Residential Rental Association highlighted the sector's growth potential and showed that the sector delivers consistent performance, low volatility and predictable returns, the PIC said.

“South Africa faces an acute need for housing. Well-located, well-managed affordable rental portfolios offer immense value for both investors and our society, and this investment signifies growth in the multifamily asset class," said Divercity Urban Property Group CEO Carel Kleynhans.