Many more people will be able to live around Sandton more affordably in the next few years, after residential property developer, Calgro M3, received approval for its Frankenwald development in August. The company, which presented its latest financial results on Monday, said it is committed to exercising the land option at the end of June 2023.
It is also confident that it can use its internally generated cash resources to build more than 20 000 residential units, catering for different income groups; from fully state-subsidised RDP houses, social housing units, homes falling in the gap housing category and stand-alone houses about R1 million.
"With the next big project for the group, Frankenwald integrated development, expected to come on stream in mid-2023, we are delighted about plans to enhance the face of affordable homes on the doorstep of Sandton," wrote the group in its latest financial report published on Monday.
The development will stretch from just after Kelvin, one of the Sandton suburbs closest to Alexandra, to Alex, where most houses are informal settlements.
"I think from a social perspective; we have to endeavour to assist the government in resolving some of Alex's challenges. Alex is way too dense," said Calgro CEO, Wikus Lategan.
"The problem in Sandton is that property is crazily priced. People travel for two hours in the morning and two hours in the evening. So, kids never have their parents at home, and they get up to no good," he added.
He believes that bringing more affordable housing options closer to Sandton can help address some of the social structures disadvantaging low-income earners in SA. Those moving closer to work opportunities who previously stayed in informal settlements without basic infrastructure can also have a chance to move to formal housing.
"The big thing about human settlements is the more you uplift people, the more you put them in proper accommodation, the better the kids go and go can study at night, and the better parents can spend time at home. So, you improved old family values. Because if you grow up in an informal settlement, you almost start life on a back foot," said Lategan.
Calgro hopes it will take 10 to 15 years to bring that development to its full potential. But Lategan hopes to complete it within ten years. The first 18 months will all be about putting the required infrastructure in place.
Although many developers end up delayed, frustrated and sometimes abandoning the planned project because of infrastructure woes, Calgro is funding its own bulk infrastructure to avoid relying too much on the government. For instance, in the six months to 30 August, it spent R47 million on infrastructure for its developments in Belhar, Western Cape, and Jabulani and Fleurhof in Johannesburg.
Where the state is responsible for providing bulk infrastructure but doesn't do it in time, the company puts the infrastructure in place using its own resources, providing some sort of bridge financing, and then enters into service-level agreements with the government.
Although this will likely be a flagship project for Calgro, the developer has built numerous lifestyle estates for people who don't earn much. Although those homes fall in the category of what many developers call affordable housing, Calgro thrives on bringing the same lifestyle perks to those developments as it has in its upmarket estates in Fourways.
In the six months to 30 August, Calgro completed 1 193 housing units and had 3 965 others under construction. Approximately half of these are expected to be completed or handed over to their owners before February 2023.
Lategan said the biggest growth is coming from integrated developments and the gap housing market - that is, people and households who are not poor enough to qualify for an RDP house but also not earning enough to finance a comfortable home using bank loans.
Another expanding area for Calgro lies in memorial parks. That business caters for families who want to find their loved ones a better alternative to state-owned cemeteries. Its sites include Nasrec, Fourways, Enokuthula, Bloemfontein and Durbanville Memorial Parks.