Typical illustration of Calgro M3 residential units and amenities
Our rental product offering allows the Group to capitalise on infrastructure created in its Residential Property Development as well as to address the lack of sufficient affordable rental opportunities in metropolitan areas.
In line with our medium to long-term strategy, the Group entered this space to secure annuity revenue for use as operating cash within the Group. In addition to this, a property developer’s biggest risk, when starting a project, is the availability and creation of bulk and link infrastructure. Each time a development is begun, infrastructure is created, but it is sold off and new infrastructure is again created at a new project.
This strategy further aligns to assist Government in the eradication of the housing backlog without exposing the Group to diminished public-sector spend.
For a long time now Calgro M3 has investigated participating in the residential rental market. This has led to partnering with SA Corporate Real Estate (through their wholly owned subsidiary Afhco) for the first phase of our investment and resulted in the announcement of the Afhco Calgro M3 Consortium (a Real Estate Investment Trust ("REIT")), to service the residential rental market in South Africa. Of the first tranche of 3 852 units, 648 units have been completed and handed over to the consortium since November 2017. The remaining units will be handed over in a staggered manner over the coming months, with Belhar delayed due to the water challenges in Cape Town.
The Afhco Calgro M3 Consortium is to target net property income yields of circa 10.5%.
The joint venture harnesses the credentials of each partner and focuses on the development and expansion of high-quality residential portfolios that offer sustainable growth opportunities and capital appreciation in the medium to long term – all the while remaining mindful of building legacies, changing lives.