Residents of Khayelitsha, outside Cape Town, will soon benefit from an affordable housing development launched yesterday.
The sod-turning event marked the second phase of the project, which will see 1200 houses being built.
The first phase began in November last year with the completion of the township's first shopping mall.
Rand Merchant Bank will provide a R300million loan as part of the project's funding. Other funding will come from Dutch development bank FMO and the Development Bank of Southern Africa.
"The mall has had a highly successful 12 months and is presently running at 97 percent occupancy," said RMB's Kevin Wiles, who heads up the company's affordable housing division.
The project's developer, Khayalethu Projects, said that its first commitment was to build a show village of eight units, which would allow Khayelitsha residents the chance to give their input.
"This is the future of affordable housing in South Africa. Upfront funding commitments are key to their success," said Wiles
The mass-construction and upfront payment model, introduced by RMB in its Clayville project in Gauteng in July, allowed the costs to be brought down due to economies of scale.