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Calgro M3 courts bigger investors

Low cost housing developer moves to JSE main board, aiming for institutional investors not allowed to buy into alternative exchange (AltX) companies.

LOW-cost housing developer Calgro M3, which listed on the JSE's main board last week, is aiming to attract institutional investors that were not allowed to buy its shares when it was trading on AltX.

CEO Ben Pierre Malherbe told Business Day last week that the JSE main board was an appropriate platform for growth for the company as the government was prioritising and increasing spending on low-cost housing. "The low end of the property market is the most active at the moment and we are well positioned to take advantage of that after years of building capacity and expertise in the company as opportunities present themselves.

"Listing on the main board gives us exposure to institutional investors some of whom were not allowed to buy our shares on AltX." Mr Malherbe said the challenges of building low-cost houses needed the involvement of both the government and the private sector. "Last week's budget speech presented the property market with a number of opportunities in terms of its focus on infrastructure development and helping the low end of the market.

Mr Malherbe has every reason to be optimistic. As part of its drive to provide affordable housing and address the disparities of SA's urban landscapes, the government last week allocated R50,5bn for low-income housing and the upgrading of informal settlements in secondary cities. Another R27bn has been allocated for the upgrading of informal settlements in large cities over the next three years. The government proposed tax relief for housing developers and employers that provide housing at less than R300000 a unit.

Additions to the human settlements development grant of R1bn over the medium term provide for the upgrading of informal settlements — increasing the three-year baseline amount for the grant to R50,5bn. The additions are to address a lack of affordable housing stock for middle-income households that earn more than the thresholds for Reconstruction and Development Programme-type housing but which cannot afford home loans.

"The budget presented us with good news, especially for housing developers in the low end of the market. Government is playing a critical part and I think in partnership with the private sector more can be achieved," Mr Malherbe said. Last year, Calgro M3, which listed on AltX in 2007, expanded across the country, operating in Gauteng, the Western Cape and Bloemfontein. In the Western Cape the group advanced its foothold with the R1,3bn Belhar integrated housing project.

The high-density residential component would comprise 3600 units including social housing, open market rental (subsidised by the government), affordable housing as well as student accommodation. Mr Malherbe said he was optimistic about the company's prospects in the Western Cape, with a number of new social housing projects recently approved by the council. The group is further partnering in Bloemfontein's social housing project, Brandwag. "We are in the process of completing phase 1 (402 units) with construction of the next phase of 495 (units) having commenced during February."

There are 897 social housing units under construction.