Despite South Africans paying rent, their pension funds remain detached from this market. This paradox manifests in the fact that pension fund members support one of the most stable income sources in local real estate as tenants, while their pension capital is largely absent from this area of opportunity.
According to Shayla Desai, head of Old Mutual's Housing Impact Fund, multi-family sectors are underrepresented in institutional portfolios. She notes that in South Africa, where there is a shortage of over three million suitable homes, affordable housing segments target a net yield of 9% or higher with inflation indexing, delivering a total return of CPI plus eight, while also providing measurable social impact.
Desai cites an example where a young professional in Johannesburg pays rent in a managed residential complex, while their pension fund has minimal involvement in the asset class they help sustain. According to MSCI South Africa data, the retail sector accounts for 61% of approximately R410 billion in institutionally owned property, whereas multi-family housing makes up only 6%.
The fund head emphasizes that in countries like the Netherlands, the USA, and much of developed Europe, multi-family housing is among the largest institutional investments, exceeding 13% of liquid assets in some markets. During the Covid-19 pandemic, global institutional capital flowed into apartments because this asset class is considered defensive. However, South African allocators are focused on sectors most vulnerable to slow economic growth: retail and its associated industrial sector.
Murray Clark, co-founder and CEO of Neighbourgood, previously noted that although the country's residential property market is valued at R6 trillion, less than 2% of the R150 billion institutional capital pool is allocated to this sector.
The fund, which focuses on developing and managing affordable quality rental and student housing, asserts that the issue is no longer a lack of information. MSCI data over nine years clearly shows that rental yields are around 8.5%, comparable to other real estate sectors. Furthermore, net income growth consistently exceeds inflation, reaching 4%–6%.
During the peak of Covid-19, leading institutional portfolios maintained employment levels above 90%, and bad debts remained below 3.5%. Listed instruments continued to pay dividends during lockdowns, while offices emptied out. As Desai observes, 'During the July 2021 unrest, shopping malls were burned; nobody was burning their own home. The lesson operators have repeated for a decade is that whatever happens in the economy, rent is paid first.'
She adds that 'Housing is the last expense a household budget cuts, making a diversified roster of thousands of people structurally more resilient than a lease based on a handful of corporate tenants.'
Desai argues that the objections that kept institutions away have been refuted. It was previously believed that short-term leases implied income volatility; however, thousands of monthly leases across various income ranges and employment sectors act as a risk mitigator, not a source, even if pricing can adjust overnight. This flexibility is unavailable to other real estate sectors.
Moreover, the supposed uncontrollability of tenant turnover has been disproven: the country's largest operators regularly manage between 300 to 500 properties per month, with move-outs before noon and check-ins afterward, while aggregate vacancy and bad debt remain below 2%. Tenants who were supposed to be temporary now have an average lease term that has increased from 18 months to three years, comparable to an office portfolio. Lenders who were skeptical now view senior debt with a 75%–80% leverage ratio as a standard product, and banks that previously demanded proof are now competing for sector financing.
The operator aspect remains a question, and here allocators are right to demand a thorough approach. Desai insists that this is a consumer-focused business, not passive property ownership. Income is generated through the mechanism of asset leasing, payment collection discipline, tenant experience, and cost control, meaning two identical buildings on the same street can yield vastly different results.
She stresses that 'The investment is the player. But this is an argument for careful manager selection, not avoiding the sector.' Desai adds that South African institutional operators have spent twenty years developing these capabilities, and those who have studied the multi-family product in the UK, Germany, and the US agree with her: the local product and its management do not lag behind global standards, and in many cases, surpass them.
The yield profile answers investors' questions. Funds in the affordable segment target a net yield of 9% or higher with inflation indexing, providing a total return of CPI plus eight against solving a national problem—the shortage of over three million suitable homes. Desai emphasizes that 'This is not concessional capital. It is commercial return that coincidentally solves a national problem, in an asset class where demand far outstrips supply, and the growth constraint is land, zoning, and municipal permits, not tenants.'
Experts note that leading sector operators plan to double their portfolios by 2027. This supply-demand imbalance is a signal for long-term capital. The sector covers approximately 23% of South Africans' rent payments, yet most still rent from private owners rather than institutions. As the housing stock transitions to professionally managed platforms with security, amenities, and service quality that private landlords cannot provide, the universal multi-family market will grow regardless of who finances it.
Desai points out that pension liabilities are long-term and inflation-linked, perfectly matching the long-term, inflation-oriented income from multi-family housing. This alignment is almost mechanical, making the absence of the sector in institutional balance sheets increasingly difficult to justify. She concludes: 'The data exists, operators are vetted, lenders have entered, and the first major listed and sovereign investors have arrived. What was a boundary ten years ago is now simply an allocation decision, and every year it is not made, resulting in members bearing concentration risk in portfolios designed for an economy that no longer exists.'
Independent consultant Dianne Davis notes that the conversation has shifted from simply building more houses to creating well-located, affordable communities. Since 1994, millions of households have gained access to formal housing, and today nearly nine out of ten households live in formal housing. However, she says the focus has shifted to creating communities that provide access to jobs, transport, schools, and essential services.
Davis warns that rapid urbanization, rising construction costs, and growing demand from the emerging middle class are putting pressure on cities, especially Gauteng and the Western Cape, while rural provinces face different challenges related to infrastructure, communal land tenure, and economic opportunities. She believes that South Africa's future housing well-being will depend not only on the number of houses built but also on creating sustainable, inclusive neighborhoods where ownership, reliable rental options, dependable municipal services, and economic opportunities work together to improve the quality of life.
Despite expanded access to banking services, nearly half of South Africa's residents continue to keep their savings in cash at home, exposing themselves to risks of theft, fire, and lost opportunities. Experts point out that the main obstacles to using formal savings instruments remain issues of trust, accessibility, and established financial habits.
According to data from the FinScope South Africa survey by FinMark Trust and the World Bank Global Findex database, approximately 7.3 million adults in South Africa remain unbanked. Simultaneously, almost half of consumers prefer to keep their savings in cash, reflecting a combination of limited access, trust concerns, and ingrained saving behaviors, rather than just personal preference.
The key problem remains the threat to security. In South Africa between 2024 and 2025, about 1.5 million burglaries were registered (according to Stats SA, 2025), demonstrating the vulnerability of physical money outside official systems. Cash kept at home also risks damage from fire, flooding, or simply being lost, with no possibility of recovery.
In addition to physical threats, there are long-term financial consequences. Cash savings kept at home do not earn interest and are often spent more easily, reducing households' ability to build stable savings or withstand economic shocks in a constrained economy.
The continued reliance on cash savings indicates a deeper problem within the financial system itself—the need for savings solutions that are simultaneously flexible, accessible, and allow funds to be used immediately when needed. Where these needs are not met, informal methods continue to fill this niche.
Although keeping money at home is often driven by real concerns about access, trust, and control, it also puts people at risk and limits the potential growth of their funds. There is a need for formal savings instruments to better align with people's daily realities.
Banks offer various products that provide consumers with savings benefits, such as flexible access to funds without early withdrawal penalties and competitive interest rates that encourage long-term saving habits. However, the implementation of these solutions is uneven.
The company's main goal is to help South Africans change their attitude towards money and rethink its role in daily life. Therefore, the company continues to refine savings solutions that balance easy access to funds with the potential to grow savings over time, including the absence of monthly or service fees and immediate access to savings without penalties.
As more South Africans face these issues, a broader problem becomes evident: what is required for formal savings to feel as immediate, accessible, and secure as keeping money at home? Can formal savings tools completely replace informal, cash-based habits that dominate many communities?
