Sanlam Investments new property fund will support a better life for the missing middle

The Sanlam Investments Property Impact Fund, to be launched in 2024, will help SA’s “missing middle” to access affordable housing and education, as well as to grow rural and township retail opportunities writes Manka Sebastian, portfolio manager at Sanlam Investments.

Building cities that put people first is the inspiration behind Sanlam Investments’ Property Impact Fund which is set to launch this year and is rooted in the philosophy highlighted during International World Cities Day on the theme “Better Cities, Better Life”.

The Sanlam Property Impact Fund, which is targeting R4 billion of assets under management (AUM), will support businesses that deliver affordable services to the “missing middle”. The missing middle refers to those who are employed and do not qualify for government support and services, but are not affluent enough to receive affordable support from financial services and other social infrastructure providers. In SA, this represents 65% of all individual taxpayers.

The fund will support providers of affordable housing, affordable education, student housing, rural and township retail opportunities.

Defining the roles of government and private investors

“We don’t believe that private investors should usurp government’s role as a provider of social infrastructure,” says Manka Sebastian, portfolio manager at Sanlam Investments. “What the private sector can do is augment government’s efforts by providing social infrastructure assets that target this particular segment.

“If we invest in the quality of human capital-centric investments, we will actually crowd competition and investment into these targeted sectors. That will not only improve accessibility and affordability but also the quality of what is provided in areas like education and healthcare, because it introduces more competition.”

Government can help by providing private sector investors with the necessary data that enables them to identify where capital can best be deployed to address underserviced areas.

The provision of up-to-date data, such as the 2022 Census, helps create an understanding of the various individuals and populations in SA and their ownership, use and location of assets. With this data, the private sector is better equipped to assess which opportunities will generate not only commercial returns, but also impact returns when it comes to social investment.

Making data-driven decisions

Social infrastructure is a long-term commitment for private sector investors, so they need to be able to quantify not only the returns they would expect from these investments, but also the associated risks. Because SA’s private social infrastructure sector is still relatively underdeveloped, accessing this data is challenging, Sebastian says.

However, rapid advances in technology are making usable data increasingly more available across the African continent. While it was once difficult, and would take extensive amounts of time for private sector players to identify to the kilometre how many affordable houses were built in a particular place, or where healthcare was provided in a particular country, those assessments can now be done in under 30 minutes, she adds.

The increased usability of data and technology will accelerate private sector investment into social infrastructure asset classes. Artificial intelligence not only accelerates this process but also facilitates learning about different cultures. This means that infrastructure can be purpose-built for a particular culture and country.

“Our biggest asset in Africa is our people. And there is no continent better placed to meet the challenges of tomorrow,” says Sebastian.

Disclosure:

Sanlam Investments consists of the following authorised Financial Services Providers: Sanlam Investment Management (Pty) Ltd (“SIM”), Sanlam Multi Manager International (Pty) Ltd (“SMMI”), Satrix Managers (RF) (Pty) Ltd, Graviton Wealth Management (Pty) Ltd (“GWM”), Graviton Financial Partners (Pty) Ltd (“GFP”), Satrix Investments (Pty) Ltd, Amplify Investment Partners (Pty) Ltd (“Amplify”), Sanlam Africa Real Estate Advisor Pty Ltd (“SAREA”), Simeka Wealth (Pty) Ltd, Absa Asset Management (Pty) Ltd (“ABAM”) and Absa Alternative Asset Management (Pty) Ltd (“AAM”); and has the following approved Management Companies under the Collective Investment Schemes Control Act: Sanlam Collective Investments (RF) (Pty) Ltd (“SCI”), Satrix Managers (RF) (Pty) Ltd (“Satrix”) and Absa Fund Managers (RF) (Pty) Ltd. Sanlam is a full member of ASISA. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments/collective investment units/unit trusts may go down as well as up.

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