Balwin Properties, South Africa’s largest sectional title developer, has reported a dramatic decline in half-year earnings, attributed to high interest rates and pressure on selling prices. Headline earnings fell by 57% to R76.4 million for the six months ending August, with profit margins decreasing from 28% to 23%. Apartment sales also dropped 23%, totaling 640 units sold. Despite reducing operating costs by 7% and refraining from declaring an interim dividend, the market sentiment did not significantly boost the residential property sector.
The CEO noted positive trends, including reduced load shedding and fuel price cuts, which encouraged buyers who had been hesitant. Balwin’s developments, including Munyaka Signature and The Polofields, have a pipeline of 42,000 apartments across key regions like Gauteng and the Western Cape. Although Gauteng remains the largest revenue contributor, it faced the most margin pressure.
Despite challenges, the company remains optimistic, anticipating potential interest rate cuts in 2024 and beyond, which could stimulate market demand. However, caution is advised, focusing on strategic growth opportunities and cost reductions to navigate these tough economic conditions. Balwin’s shares were down over 4% in morning trade, reflecting market concerns amid these financial struggles.