Many of the previously disadvantaged areas are growing rapidly, yet infrastructure and service delivery often struggle to keep pace. “That's why developers investing in these communities play such an important role in enabling sustainable growth.
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As South Africa grapples with a severe housing crisis, the role of developers in revitalising rural nodes and underserved communities has become increasingly vital.
With millions of homes needed and significant economic opportunities at stake, industry leaders like Samantha Fintelman of Fungi Utilities and Renier Kriek of Sentinel Homes stress the importance of private capital investment in the gap market.
Developers who choose to invest in rural nodes, township economies and underserved communities are incredibly powerful.
This is not because it is easy, but because the impact extends far beyond the buildings themselves, writes Fintelman, a key account manager, in a LinkedIn post.
She says developers such as ALT Capital Partners, Shenge Property Group, Inkanyeli Group, Exemplar REITail, Masingita Group of Companies and others are helping drive economic growth in communities that have historically been overlooked.
“These developments do more than create commercial opportunities. They create jobs, improve infrastructure, support local businesses and bring essential services closer to the communities that need them most.”
The understanding that meaningful development creates a ripple effect that can transform communities for generations, says Fintelman.
She says many of these areas are growing rapidly, yet infrastructure and service delivery often struggle to keep pace.
“That's why developers investing in these communities play such an important role in enabling sustainable growth.
“From a utilities perspective, growth of this nature requires long-term thinking. Reliable infrastructure, accurate utility management and operational visibility become increasingly important as these developments scale.
"At Fungi Utilities, we're proud to support and partner with developers who are building not only for commercial success, but for lasting community impact. The best developments don't just change landscapes. They help change lives,” Fintelman says.
However, bureaucratic inefficiencies, restrictions on debt enforcement, and misdirected blame are driving private capital away from what could be a lucrative housing market, says managing director Kriek.
“Unless the government changes its policies and practices, investors and consumers will remain locked out of South Africa’s gap market,” he says.
If such changes do not happen, market players could lose out on trillions of rands in investment returns.
SA continues to face a severe housing shortage. Speaking at the Innovative Building Technologies Summit on 3 February, President Ramaphosa declared a backlog of between 2.5 million and 3 million homes, says Sentinel Homes.
The South African housing market is divided into three main segments:
The 2026 research from the Centre for Affordable Housing Finance (CAHF) indicates that the gap market is now the hardest hit by the crisis. The shortage is prevalent in both the owned property and rental accommodation segments, Kriek says.
The exact value of the gap market is unknown. However, 3 million homes priced between R351,000 and R700,000 suggest a market value of R1 trillion to R2 trillion in units sold alone, he says.
“These optimistic estimates do not account for subsequent rental income or secondary income, like interest on mortgages, or the dividend or trading value of property stocks.
“Yet, despite enormous demand and incredible earning potential, the flow of private capital into this segment remains muted.”
To put this in perspective, the alternative home financier says the South African home loans book comprises about 1.6 million accounts, but using census data, there are about 18 million households in South Africa.
It says there is no chance of addressing this severe dearth of housing finance unless it becomes a key area of policy concern for the government as well as private market actors.
“According to the National Credit Regulator’s Consumer Credit Market Report for the second quarter, published in June 2025, 70.2 percent of mortgages granted over that period went to R700 K plus properties. In contrast, gap market mortgage grants were just under 20 percent.”
In addition, Kriek says new developments that could bring much-needed stock into the gap market are severely lacking.
He says, lastly, the introduction of Basel IV into the banking system threatens to increase the cost of home loans.
“Therefore, an arbitrage opportunity exists for non-banking institutes, who are not subject to these requirements to leverage new regulatory inefficiencies to turn a profit.”
“The gap market should be no less profitable than any other, so the lack of capital allocation tells us there is some impediment holding investment back,” says Kriek.
The MD attributes the problem to market design flaws that create enough risk to dissuade investors from committing capital.
These include:
Overall, Sentinel Homes says the government’s ideological approach to what is perceived as fairness and equality in housing enforcement has the unintended consequence of chasing investors away – the easier it is to recover deployed capital from delinquent tenants or borrowers, the more capital will be deployed.
It may seem callous to evict tenants or foreclose on bondholders who are financially distressed. However, current laws and practices cause capital holders to avoid the risks inherent in them, leaving the gap market underserved.
“By protecting a relatively small minority of delinquents, the government is denying the majority their constitutional right to access to adequate housing,” says Kriek.
The government’s role is to design the market in a way that encourages capital allocation. It is obvious from the lack of investment in gap market housing development that the existing approach has failed not just consumers but investors, too.
“It is high time that investors publicly recognise what a huge opportunity cost this is for them - they are losing unrealised returns every day because the market is broken,” says Kriek.
To address the opportunity costs of the poorly designed market, holders of capital must pressure the government to make positive changes, using every opportunity and instrument available to them.
Fast housing stock delivery and rapid debt enforcement will release capital deployment, leading to a thriving market and ample housing. It’s that simple.
“It means the government will have to make unpopular choices, but make those choices they must - or the crisis will only get worse,” says Kriek.
“We can plainly see that no progress is being made from housing supply expansion data, which shows that South Africa produces only about 300,000 housing units every decade at the current pace.
This pales in comparison to the size of the unhoused population, or the size of the housing market in general. Australia, on the other hand, has less than half our population, but produces 200,000 housing units each year. And they still have a housing affordability problem!”
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