JSE-listed property developer Balwin Properties has announced a significant shift in its revenue composition, with the Western Cape overtaking Gauteng as its primary revenue source for the first time.
For the year ended 29 February 2024, Balwin Properties reported that the Western Cape now accounts for 46% of its revenue, up from 35% the previous year.
This shift comes amidst continued semigration trends and challenging macro-economic conditions characterised by high interest rates and inflation.
Balwin said that its strategic focus on the Western Cape appears to be paying off, as the region's semigration trend continues to drive demand for residential properties.
The company aims to capitalise on this trend while navigating the economic challenges affecting the broader market. It has six developments in the Western Cape.
Key Financial Highlights:
Profit after taxation: R217.4 million, a 50% decrease from the previous year.
Earnings per share: 46.18 cents, down 51%.
Headline earnings per share: 47.94 cents, down 48%.
Revenue: R2.4 billion, a 29% decrease.
Apartments recognised in revenue: 1,892, a 32% decline.
The company attributes the decline in revenue and profits to reduced consumer demand, decreased loan affordability, and lower investment in fixed property.
Regional Performance:
Western Cape: For the first time, this region has become Balwin’s largest revenue contributor, reflecting 50% of the total apartments recognized in revenue.
The region recorded 947 apartments, with strong demand for Classic apartments at developments like De-Aan-Zicht, Fynbos (both in Milnerton), and The Huntsman (Somerset West). Continued sales at Greenbay (Gordon’s Bay) also contributed positively.
KwaZulu-Natal: Despite town planning delays at Izinga Eco Estate, the region maintained its 17% contribution to total apartments handed over, with 213 apartments recognized in revenue.
Gauteng: The region saw a significant decline, with revenue dropping by 47% and its contribution falling to 37% of total revenue. Only 732 apartments were handed over, down from 1,335 the previous year.
Despite the challenging conditions and regional shifts, Balwin Properties said it remains optimistic about the long-term demand within Gauteng. The company expects gradual improvement as the market recovers.
Shares in Balwin Properties have declined by approximately 32% over the past year.
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