Key Points:
- Balwin Properties led by Stephen Brookes suffers a 29-percent revenue drop due to rising interest rates and inflation, impacting affordability.
- Operating profit tumbles 44 percent as property market struggles. CEO blames tough economic conditions.
- Company’s core market sees the steepest decline, down 47 percent. However, CEO remains optimistic about long-term demand.
Balwin Properties (Balwin), a Johannesburg-based residential property developer led by South African businessman Stephen Brookes, fell short of investor expectations, reporting a significant decline in both revenue and profit for the fiscal year ended Feb. 29, 2024.
Revenue slumps as property market slows
The company’s 2024 annual report reveals a 29.17-percent year-over-year revenue drop, from R3.33 billion ($183.05 million) to R2.36 billion ($129.64 million). This decline reflects a challenging year for Balwin, as South Africa’s domestic property market grapples with rising interest rates and inflationary pressures. Balwin attributes the lower revenue to this slowdown.
Balwin’s profitability mirrored the tough market conditions. Operating profit plunged 44.19 percent, from R592.75 million ($32.63 million) to R330.81 million ($18.21 million). Higher finance costs compounded the pressure on profits, resulting in a net profit of R218.8 million ($12.04 million) compared to R436.9 million ($24.05 million) in 2023.
Balwin CEO Stephen Brookes cites tough market conditions
Balwin CEO Stephen Brookes emphasized the tough South African economic environment’s impact on the property sector. “The pressure on consumer spending from sustained high interest rates and above-inflationary living cost increases has translated into reduced demand for apartments, owing to the lack of affordability of loans,” Brooks said.
Consequently, the number of apartments recognized in revenue declined by 32 percent year-over-year to 1,892 units. Gauteng, the company’s traditional stronghold, experienced the sharpest sales decline, with revenue dropping 47 percent. Despite this, Brooks expressed optimism about Gauteng’s long-term demand, expecting it to improve as the market recovers
Balwin’s core business and leadership
Balwin is a large-scale developer catering to South Africa’s low-to-middle-income population. The company offers high-quality, environmentally friendly, and affordable apartments, complemented by an innovative lifestyle program for residents.
Stephen Brookes, a South African real estate mogul and founder of Balwin Properties in 1996, remains the company’s largest shareholder, holding a 36.08-percent stake.
