Calgro announces new development in affordable housing segment

JSE-listed property and private memorial park developer Calgro M3 Holdings will undertake a new housing project near Sandton in Gauteng, which will see the delivery of between 20 000 and 30 000 housing units, the group said in a statement on Tuesday.

The new development, the Bankenveld District City, will be erected alongside commercial, retail, and industrial spaces.

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On 1 March 2024, Calgro M3 and Eris Property Group formalised the acquisition of the land parcel, of which 34% will be dedicated to infrastructure such as roads, stormwater management, and extensive recreational and green belt areas.

Regarding the joint venture agreement, both parties will share the cost of the infrastructure installation required for the development. Calgro M3 will then be responsible for the residential components of the development, while Eris will handle the commercial, retail, industrial, educational, and healthcare components for their benefit.

Read: A silver lining for Calgro M3.

“Bankenveld District City is a visionary project aimed at promoting socio-economic upliftment on an unprecedented scale,” Calgro M3 said in the statement. It aims to bridge the gap between affordability and allowing access to Sandton’s economic hub.

Calgro M3 notes the project has the potential to generate upwards of R18 billion in revenue and will more than double its existing project pipeline. When the group released its interim results to 31 August 2023, Calgro M3’s property pipeline was R15.5 billion, consisting of 20 239 units. At the time, the company was active across eight projects and had 2 118 units under construction.

“This financial injection is expected to support the company’s correct valuation,” it said in the statement.

Calgro M3’s existing affordable housing project, Frankenwald, is supposed to launch in mid-2024. The development is situated next to Alexandra and the Marlboro Gautrain Station. This project was also undertaken in equal partnership with Eris, where Calgro M3 took responsibility for the residential-, and Eris the commercial, retail, and industrial opportunities.

Sandton was historically known for housing high net-worth individuals in properties worth millions of rand. However, recent developments like the Rivonia Social Housing Development will provide housing for South Africans in lower income brackets.

Calgro is currently active in two metros – Johannesburg and Cape Town – where 13 developments are in progress. In 2022, it exited operations in KwaZulu-Natal (KZN) following disruptions due to cost pressures and the so-called construction mafia.

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Read: Calgro M3’s KZN exit due to construction mafia and other issues

In 2020, Calgro M3 closed its construction division and sold its entire residential rental portfolio. This allowed the company to focus on its core business, namely residential and private memorial park developments.

Read: Calgro closes construction division, retrenches 150 employees

Calgro said in a voluntary trading statement earlier that it expects strong growth in headline earnings per share of at least 20% for the full year, which ended 29 February 2024. The results announcement is expected to be around 13 May.

Calgro M3’s share price traded around R4.90 in early morning trade – 1.03% up from Thursday.

Calgro M3 share price

Roy Walsh

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