Financial services firm Investec Bank has secured a $200-million loan from development finance institution the International Finance Corporation (IFC) to support expansion across South Africa of property developments that are aligned with recognised sustainable building standards.

Investec will deploy the funds through its Sustainable Solutions offering to augment the supply of buildings that are designed, built and operated to reduce energy and water consumption, as well as the carbon-intensity of construction materials.

The loan will expand access to funding for projects that are aligned with recognised sustainable building standards, including Excellence in Design for Greater Efficiencies or equivalent frameworks, and support clients in integrating sustainability into new developments and refurbishments.

This will lead to more water- and energy- efficient construction and the use of sustainable materials, the bank says.

The $200-million will be allocated across commercial and residential buildings that are aligned with recognised environmental performance standards, thereby supporting developers and investors to implement energy-, water- and resource-efficient designs, with the potential to reduce operating costs over time, depending on design and use.

Demand for housing and urban infrastructure is rising in South Africa. Municipalities are battling to maintain and expand the energy and water infrastructure that supports services to residents and businesses, and to provide these utilities at affordable rates, Investec says.

The shift toward more energy- and water- efficient buildings is a significant opportunity to address affordability, resilience and environmental performance across the property value chain.

In this way, the sector will play a critical role in promoting economic growth, while simultaneously supporting a low-carbon transition, Investec says.

Further, the funding will unlock incentives that will be deployed in Investec’s Structured Property Finance business to incentivise real estate development clients that are developing certified sustainable projects across the residential, retail, industrial and mixed-use sectors.

However, these developments must meet recognised sustainable building criteria, as well as the IFC’s environmental and social standards, Investec notes.

Investec will also launch its residential green mortgage product to offer incentives to qualifying clients to buy qualifying certified residential units.

“By combining sustainable construction incentives with a green mortgage offering, we are driving a full ecosystem approach – from developers to end buyers,” says Investec Sustainable Solutions head Melanie Humphries.

“With South Africa’s infrastructure under strain and utility costs escalating, the commercial case for sustainable construction has never been stronger. This facility enables our clients to build for resilience, efficiency and long-term competitiveness,” she says.

“This funding enables Investec Structured Property Finance to offer meaningful incentives to clients who meet recognised green building standards. By aligning capital with sustainability outcomes, we are reducing the cost of funding for qualifying developments while supporting the transition toward more energy-efficient, environmentally responsible real estate across South Africa,” comments Investec Structured Property Finance head Charl Wiid.

“Expanding the availability of sustainable buildings, including housing developments, can deliver real gains for communities, jobs and climate resilience across South Africa,” says IFC Financial Institutions Group regional industry manager Kalina Miller.

“Through the partnership with Investec, we are helping alleviate the water, energy and low-carbon transition challenges in South Africa and strengthening one of the country’s most important jobcreating sectors.

“This partnership further helps close the financing gap for sustainable construction, meet the demand for lower utility costs from both commercial and residential clients, and support the mainstreaming of sustainable building practices in the market,” she adds.

Further, the partnership strengthens Investec’s ability to structure property finance solutions that are commercially viable and designed to support environmental performance improvements, and which are subjected to project-level outcomes and measurement frameworks.