With award-winning projects ranging from affordable housing units to high-end luxury suites, Renico Construction always works hard to create the first-time home buyer’s dream house, regardless of his or her budget.
Nico Louw, a true leader in the South African housing market, with an entrepreneurial streak that popped its head at the tender age of 16 and saw a 19-year-old Nico with ownership of three properties, noticed an opportunity in 1998 to tap into the growing demand from first-time home buyers for affordable, quality homes. That’s when Renico Construction was born.
Fourteen years later, the company is still targeting first-time home buyers and investors and has successfully completed over 100 projects. The value of its contracts has gone from a few million rand to over a few hundred million rand.
Although Renico now also holds a reputation for impeccable commercial and industrial developments, it always keeps its core business of first-time home buyers top of mind. And it’s certainly a good time to be a leader in the residential housing space as South Africa’s prime interest rate is the lowest it has been in 50 years. Now, it is an ideal time for potential home owners to go out and make that dream a reality.
Regardless of the fact that the company has had its fair share of highs and lows over the years with the fluctuating economy, Johan Louw, project manager at Renico Construction, says one of the things that has kept the company going is its ability to identify and adapt to the market demands as construction landscape has transformed over the years.
“During the housing economic slump a few years ago, what pulled us through was the industrial and commercial space,” says Louw. “When one was quiet, the other was busy. We’ve become a specialist in building commercial properties.”
Recognising the need to diversify, the company ventured into the commercial and industrial space around seven years ago. Large-scale industrial parks and office blocks have since been completed and sold to businesses and institutions.
One of such projects is the Mostyn Park corporate offices in Randburg, which is currently under development. Valued at 102 million rand, this property will be a corporate office with warehousing ideally suited for a distribution centre with two entrances perfect for deliveries, a fitted sprinkler system, dedicated pump and tank station, and a 2,120 square metre air conditioned office space with its own server room.
In another example of Renico Construction’s ability to read the pulse of the market and target buyers’ demands, last year the company ventured out together with Hlala Kamnandi and built its first affordable housing development in Protea Glen in Soweto, a 71-unit, sectional-type of development consisting of two to three bedroom units. Protea Glen was awarded the Best Housing Project for Units Over R120,000-00” by the Southern African Housing Foundation,” says Louw.
“If you look at the demographics in South Africa, there’s a huge shortage of housing for that sector,” says Louw. “Government is putting a lot of focus on affordable housing. Financial institutions aren’t really interested in that segment of the market, but the government is saying they really need to concentrate there because they are the ones who were left behind. So we’re really tapping into that and in the next three to four years, we’re looking at doing about 2,500 affordable housing properties.”
Socially responsible construction
Being respectful and socially responsible is a big part of Renico Construction’s corporate philosophy Internally, the company places enormous emphasis on safety in the work environment, with site foremen applying a zero tolerance policy to non-compliance with safety standards.
Louw says part of Renico’s recipe to success also lies in the value placed on its suppliers and sub-contractors: “A lot of them have been working for us for up to 15 years. On each project, we do not appoint a new subcontractor; our subcontractors form part of the family. They know how we work, what pace we work at and what we expect from each other. That is the reason we can deliver the goods at such a short period of time.”
Externally, the company is making efforts in ensuring Renico operates as ‘green’ as possible. Renico knows that development leaves behind a large carbon footprint, but the company actively strives to do as much as it can to reduce its impact, according to environmental regulations.
“We’re unfortunately not pioneers in the market, but we own a quarry and we recycle a lot,” says Louw. “We have a large property portfolio looked after by a full-time garden maintenance team, who recycle and bring all the grass cuttings back to the main office site where it’s turned into compost.”
Renico does more than that. It ensures an environmental consultant is appointed on each site to assist with any issues that may arise. And its head office, with its garden landscaped and indigenous flora, is tastefully walled and gated to protect the surrounding community from the “eyesore” the property potentialy creates. This effort has even won the company Fleetwood Magazine’s “green star” mark of recognition last year for showing that the construction industry can still have a green side to its operations.
“We believe going green is the way to go,” says Louw. “Solar energy and solar geysers are actually becoming law in South Africa and we embrace that.”
Risks lead to success
As the budgets for first-time home buyers vary, so do Renico Construction’s residential projects. The last 12 months haven’t only marked Renico’s break into the affordable housing market, but it has also seen one of the company’s highest-budget residential projects come to fruition.
Valued at 127.5 million rand, the company is currently busy with construction on Parkwood Manor, located near the opulent financial district of Sandton. “It’s known as the place to be in Johannesburg,” explains Louw.
Considering Renico is the new kid on the block in this area, Louw says it was exciting to see how well the properties sold once they launched. In fact, all 102 units sold out within two weeks of the launch date. And the occupation date was moved forward from April 1, 2013 to December of this year.
“Properties are selling for an average price of 1.25 million rand,” says Louw. “With sales going that well, we’re on site and building at high speed. That’s one unit every two days that we’re to finish. We’re on track to do that as well.”
Out of everything Renico has learned and developed over the years, from its tight-knit team, its speed and accuracy in completing contracts and its acute sense of social responsibility, perhaps its biggest strength has been its keen perception in identifying new needs or trends and knowing exactly where to strike, even if it means taking a risk.
“In the past four years, with the slump in residential market, we kept to our guns and kept on developing properties. What we found was you can’t sell a property on paper. You have to build it,” says Louw. “What has happened to a few developers in South Africa is a lot of them have launched, then couldn’t do the pre-sales, so they cancelled the developments. From our perspective, what we do is get on site, start building at our own risk and build. But what we’ve found is the market likes to see that, they like to see that there’s commitment from the developer’s side and then they’ll commit by purchasing a property.”