Major South African property developer takes a hit

Property developer Calgro M3 saw its revenue decline significantly in the first half of its 2026 financial year, although it kept a close eye on costs to prevent a bigger hit to its profit margin.

Calgro M3 is a property investment company specialising in developing Integrated Residential Housing Developments and developing and managing Memorial Parks.

On Monday, 13 October, the company released its interim results for the six months ended August 2025.

These results showed a significant decline in revenue, down 10.16% to R460.03 million, which the company attributed to a shift in capital allocation to its Bankenveld District City project, where infrastructure installation has started.

Despite this decline in revenue, Calgro’s gross profit margin remained relatively stable at 29.43% due to cost-saving initiatives and the benefit of historical land costs.

Calgro’s gross profit for the period declined by 10.60% to R135.38 million, while total comprehensive income decreased by 17.58% to R80 million. The company’s basic earnings per share fell by 17.72% to 83 cents per share.

From a segmental perspective, Calgro’s Residential Property Development segment accounted for 91.34% of group revenue. 

Revenue in this segment decreased by 11.59% during the period, albeit while maintaining a healthy gross profit margin of 27.44%.

CEO Ben Pierre Malherbe explained that the reduction in revenue is partly attributable to the allocation of resources to the Bankenveld District City development, which the company expects to yield over 20,000 opportunities.

Calgro’s Memorial Parks segment reported a stronger financial performance, increasing revenue to R39.83 million. This division’s gross profit also increased to R20.07 million.

Overall, Malherbe said the group has dedicated significant time to rethinking its operations, drawing on decades of experience in residential property development and more recent expertise in memorial parks management.

“This has enabled us to refine our strategic pillars, focusing capital on future opportunities that optimise the portfolio and reduce debt through the sale and completion of non-contributing assets and projects,” he said.

One of these pillars includes balancing the two business segments in the long term.

Malherbe said this would be done by reducing the number of non-contributing projects in the Residential Property Development business and increasing the Memorial Parks business footprint to diversify risk.

The company also plans to focus on managing the relationship between its net debt level in relation to its market capitalisation by delivering on short- to medium-term goals.

“The implementation of our strategic pillars is necessary as the Bankenveld District City development begins and the group positions to execute on fewer projects with equitable contribution levels,” Malherbe said. 

“At the same time, the Memorial Parks business has matured, is extremely cash generative, and is poised for further growth.”

“This revitalised strategy has invigorated the entire business, while also ensuring that the business’s debt structure is aligned with its size and capital requirements.”