Semigration to the coast boosts Balwin Properties

JSE-listed specialist, national residential property developer Balwin Properties says increased interest in its Western Cape and KwaZulu-Natal (KZN) residential developments has propelled an uptick in half-year sales for the period ended August 2022.

Gauteng – although still leading – contributed 47% to total revenue received from apartment sales, a drop from 60% in the previous comparable period.

Coastal regions on the other hand have in the period registered an uptick in apartment sales, with the Western Cape contributing 32% to total revenue – up from 30% in last period – and KZN contributing 21%, up from 10% in the 2021 comparable period.

This shift in sales contributions within key regions in the country, can be attributed to an increased interest in semigration by property buyers, according to Balwin.

“Despite rising interest rates and a constrained economy, client demand for our apartments remained strong and sales recognised in revenue closed up 8% for the period, at 1 360 apartments. This was driven primarily by semigration to the Western Cape and our unique lifestyle offering with a focus on green living,” CEO Steve Brookes says in a statement.

“We are also encouraged by the 1 551 apartments forward sold, but not yet recognised in revenue, which will support growth in the next six months and beyond.”

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Key metrics

Balwin recorded a 20% bump in group revenue during the six-month period to R1.6 billion, up from R1.3 billion, while profit for the period increased by 48% to R173 million, driven by higher sales volumes of apartments handed over and improved profit margins.

Earnings per share came in 48% stronger to 36.88 cents during this period, while headline earnings per share (Heps) grew 47% to 36.63 cents.

The group’s net asset value per share increased to 771.39 cents, higher than the 692 cents reported in the last comparable period.

Focused cost-containment measures, together with robust pricing on the sale of early-phase apartments, drove the 2% improvement in gross profit margins to 26%.

Balwin also reported a strong cash position of R581.2 million at period end.

“Our strategy of reducing the yield curve between the first and last phases of a development is gaining traction and is especially noteworthy on the back of the high-cost increases in the construction industry during the period,” Brookes adds.

“Demand for our apartments allowed for some elasticity in selling prices; however, the team put in a huge effort to limit cost increases through effective cost engineering and concentrated cost containment, supported by our in-house procurement department.”

“At the same time, we worked closely with our architects on creative design modifications and specifications to reduce costs, without compromising on the quality and world-leading environmental standards associated with the Balwin brand,” he adds.

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