Housing developer Calgro M3 said on Tuesday that cash flow at one of its operations had been stunted by people illegally occupying its developments.
Calgro, which traditionally builds affordable housing, has spent the past year launching rental business in partnership with SA Corporate Real Estate, and a memorial parks business. Within six years, the three businesses will each contribute a third to Calgro’s group revenue.
CEO Wikus Lategan said while the new residential rental business had gained momentum in recent months, Calgro’s developments business had been delayed by people trying to illegally occupy the housing units it was building.
"The residential rental investment business is well under way with a total of 1,140 units handed over to the consortium. The balance of the first 3,842 units are being delivered on a staggered, monthly basis," Lategan said.
"The residential developments business has experienced delays on circa 4,000 of the 7,093 units under construction and/or ready for construction in the Fleurhof, Belhar, and Scottsdene developments," he said.
These delays were brought about by illegal, and attempted illegal, occupation of partially and fully completed units, electrification and water shortages.
"I can’t deliver houses when people are occupying them illegally. This delays our processes and cash flow cycle. However, we are managing the problem. Our developments are fully insured and insurance claims have been implemented," said Lategan.
He said he could not quantify the financial damage caused by the delays but would provide details of the effects on the group when it next released financial results, for the six months to August 2018.
Meanwhile, sales of completed houses in the private sector were affected by a decrease in activity on site and had also come under pressure.
However, sales at its Belhar project in Cape Town were showing high demand with 124 units sold within the first 18 days of marketing, according to Lategan.
Calgro owns five memorial parks, thee of which are in Gauteng and one in the Western Cape and one in the Free State.
Lategan said these assets provided annuity income to Calgro. The group manages these parks and sells graves.
"Although tough economic trading conditions persist, the group is optimistic about the future but remain cautious and have continued conducting operations in a controlled, sustainable manner through protecting its cash flow," said Calgro.