Johannesburg - AltX-listed affordable property developer Calgro M3 (Calgro) reported solid interim results as the lower segment of the market showed a stellar recovery from the residential building slowdown, its CEO said on Friday.
Calgro CEO Ben Pierre Malherbe said the Breaking New Ground (BNG) and affordable housing segment recovered faster than the upper end of the market, due largely to households’ ability to access home loans and the high demand for housing.
"End user bonds are coming back - there are 100% bonds again," he said. "Government is also stimulating the market with subsidies; there are indications that 2011 will be a very good year for us."
The group reported an increase in headline earnings per share to 3.61 cents from a loss of 2.93c for the six months to end-August. Operating costs were reduced by 17%.
Calgro developments include affordable housing units in Lenasia, Riverlea and Klippoortjie in Gauteng.
According to Malherbe the biggest opportunities for Calgro lie within the gap market, consisting of households earning between R3 500 and R15 000 per month.
It is estimated that 600 000 to 800 000 homes are needed for this market.
"The opportunities we're seeing are also in the social housing and rental market which are coming back," said Malherbe.
The government's infrastructure spend before the 2010 Fifa World Cup indirectly benefited the group; the Rea Vaya buses and Bus Rapid Transit system made certain areas more accessible and boosted consumer interest in living in these areas, Malherbe said.
Malherbe said the group’s pipeline of work is solid.
The group has increased its cash base significantly from R1m to R31.2m. Malherbe said it would be cautious on acquisitions and expansion into other provinces.