RED CASTLE DEVELOPMENTS is committed to create durable, comfortable and beautiful homes to the people of South Africa, with an specific focus in providing affordable opportunities to first time owners and offering employment and professional training in the all the fields related to construction to the unprivileged.

Job creation and skills development

Red Castle Developments addresses two major social issues of the country, the critical need for decent housing to the millions of families living in informal settlements and the urgent need to provide employment and skills to the lower income groups of the society. We are helping unskilled labour to start working with an easy method of construction that introduces them to the building procedures and opens for them future opportunities for a better life.

House ownership

Housing shortage is endemic since the apartheid era, with the 1996 Census reflecting a housing backlog of 2,202,519. Red Castle Developments focuses on creating sustainable housing developments whereby people own their properties. Specifically first time owners from the less privileged segments of society. Moving to a newly built quality house, fully owned, engenders a sense of pride in their families, streets and areas and advances the entire community.

Finance for all home buyers, also the underprivileged

For housing developments to be sustainable, all sectors of society must participate – government, communities, NGOs, the private sector and individuals. Access to finance remains the biggest obstacle to housing delivery. Since 1994 the government has attempted to work out solutions with banks on issues like red-lining, bad debts and subsidy-linked bonds.

Red Castle Developments works in close cooperation with the four major South African banks to facilitate soft bonds to all new buyers, including the low-income sectors of the community.

Addressing the housing shortage in South Africa

Access for the poor to urban land and housing has been one of the main challenges facing policy makers in South Africa in the last twenty years. Red Castle Developments was born in this social context, aware of the needs of the society and aiming at occupying a niche in the market that delivers answers and remedies to a pressing housing shortage.

Estimates suggest that 26% of households in the six metropolitan areas in our country live in in-formal dwellings, often “illegally” and with limited access to services. Movement from the informal to the formal sector remains very low.

The growth of informal settlement in cities is often the upshot of unplanned urbanisation or lack of coordination. The concept of new urbanism emphasizes coordination between long term land use, housing and transportation planning as an essential pillar for sustainable growth. It recognizes the importance of spatial or geographic proximity, layout and an integrated design of those uses.

Conversely, a lack of efficient integration can throttle sustainable development and eventually leads to an inferior growth path with suboptimal housing, educational, employment and service opportunities.

The South African government has put a lot of emphasis on the provision of subsidized housing, first introduced under the Reconstruction and Development Program (RDP), commonly known as the RDP Housing program. However, escalating housing prices, limited access to land and housing finance, land regulations which govern sub-division of land, highly regressive land taxation, and low supply elasticity of subsidised housing has made it difficult for poor as well as middle class households to enter the formal housing market.

While private developers should in principle enter this market once they have exhausted the currently more lucrative and familiar real estate markets for middle and high-income households, existing sub-division and environmental legislations significantly increase transaction costs.

In addition, the speculative premium on land is driven up by non-existent or, in some areas, even highly regressive land taxes. In anticipation of the implementation of the new Municipal Property Rates Act (currently implemented by only a small fraction of municipalities), municipalities have to implement the old legislation.

Another reason for slow delivery of housing can stem from the limited capacity of some municipalities to engage the market.

Finally, there is a lingering resistance in many municipalities to set aside well-located land for low-income households. The resistance is related to pressure from high-income groups who wish to avoid perceived devaluation of their properties from being near housing for the poor as well as the perceived tax revenue losses when compared to other uses – in particular, up-market gated communities.