Development Concept

 

Blok Raw is a new product by Blok aimed at introducing a new range of urban homes in a new price band and new locations within Cape Town's growing urban centre. We have selected FORTY ON L, located on Lion Street in the Bo Kaap, as the development in which to not only unveil the new Blok Raw product, but also a new development model that we wish to pilot, the 80:20 model.

 

WHAT IS THE 80:20 MODEL?

The 80:20 model is built upon extensive local and international research and looks to adapt the current development model to allow developers to deliver a more diverse mix of housing in well-located urban areas. The model exemplifies inclusionary housing which are homes supplied by the private sector to a market that would not have had access to the development nor the area within which the development takes place.

 

HOW DOES IT WORK?

This approach depends upon unlocking potential bulk on existing sites earmarked for development, which in this case, will add 20% more apartments to the original scheme that will be sold at a more affordable price through an audited, open draw system. This is because the sale of the apartments in the originally planned-for scheme, accounting for 80% of the total number of units, are to be sold on the open market at market-related values to subsidise the land, finance and planning costs of this 20%.

The goal is to evolve a model that can be used to illustrate the potential role of developers in shaping our city and to create awareness around their ability to undertake similar projects that will begin to assist in contributing well-located, inclusionary urban housing that is targeted at the stretched middle market.

Not only will the 80:20 development model enable more diverse income groups to live in well-located parts of the city, a medium-density approach will allow services to be delivered more efficiently and more sustainably whilst promoting cultural diversity and sustainable economic growth.

An inclusionary housing development model which incentivises developers to add a percentage of more affordable apartments to an existing development, targeted at the middle-income market. 

Developers apply to the local city council for additional building rights on their existing development known as a bulk departure. This bulk departure falls within the zoning scheme and is well within the maximum envelope that could be built on the site as defined by the setbacks and height restrictions.

They then allocate this bulk on a 1-for-1 basis, which means that for every square metre of inclusionary housing added, the developer can add a square metre to the original scheme.

As part of the extensive consultation procss which involved input from the local city council, it was suggested that the model should be scalable so that developers should be incentivised to introduce more affordable units into their developments, while improving the overall viability of the project. It was felt that this amendment to the model would act as a stronger incentive than the 80:20 ratio model.

It is the site of Blok’s development where the inclusionary development model will be piloted. It is located at 40 Lion Street, Bo Kaap.

It comprises the original scheme of 54 open-market apartments (already launched for sale) and will use the bulk departure to add:

  • 400 sqm for 11 more affordable apartments and
  • 400 sqm for more open-market apartments

Affordable housing can be defined as housing units which are affordable by the section of society whose income is below the neighbourhood’s median household income or whose income would not qualify the household for finance to apply for the open-market units in a particular development.

It is a form of affordable housing supplied by the private sector to a market whose household income is not sufficient to grant them access to finance or a bond for a particular development on the open market, or where their income range would not give them access to purchase housing in a well-located area within which the development takes place. 

They will be priced at 30-50% lower than the sale value of open-market apartments within the overall development and the development is in a well-located part of Cape Town.

Currently, the average 1 and 2 bedroom prices in the Cape Town CBD require an income range of R70,000 to R150,000 a month to qualify for a bond or loan financing. The more affordable apartments in FORTY ON L will be targeting a combined or household income range of R15,000 to R45,000 per month.

While the prices have not yet been finalised, the apartments’ prices will be between 30-50% lower than the prices of similar open-market apartments in FORTY ON L.

The 1 bedroom apartments will be approximately 35-40 sqm and the 2 bedrooms will be approximately 50-55 sqm.

Yes, a common shared space towards the centre of the development will be accessible to all homeowners and includes a deck, pool, laundry and a gym.

Yes. While they do not finance, design or build the development, the model requires the support and buy-in of the local city council to obtain the additional development rights. It is then the role of the developer to finance/design/build/sell and the participating community in the project to inform the criteria for qualification and provide general support for the development.

This is achieved through a cross-subsidisation where the open-market units in the development subsidise certain costs. i.e. these cots are not allocated to the inclusionary housing units. These costs include the cost of the land, interest costs, holding costs, finance costs and various service fees related to the development such as engineers, architects, planning and more.

They will be sold through an open-draw system, after households have been through a prequalification process with a 3rd party independent financial institution.

The apartments will be made available to first time buyers only, and households will qualify for certain apartments based on their total household income and household size (the number of people living in the household).

Yes, however a restriction on the sale value will apply for a period expected to be between 15 and 20 years. This is done to ensure that these apartments remain within the targeted middle income market, rather than being bought, flipped for profit and ending up in the market-related space.

The design was guided by a Contextual and Urban Fabric Analysis prepared by an independent third party firm. You can download the report here.