AltX-listed housing development company Calgro M3 was confident that it could contract for a “sizable portion” of the shortage of 2,6-million homes government was trying to provide for South Africans.

The group noted in a statement to shareholders on Tuesday that the affordable housing market’s continued shortage, which comprised a shortage of two-million reconstruction and development (RDP) homes and 600 000 affordable houses, translated into strong demand, even in the prevailing macroeconomic environment.

“This market shows price elasticity as individuals continue to purchase the houses as they become available,” the company noted in the statement.

Government would spend R73-billion on housing projects over the next four years to deliver about 250 000 houses a year.

Calgro added that it had formed good working relationships with government in public–private partnerships in this regard, as its business model was in direct alignment with government’s breaking new ground principle, which focused on integrated and mixed-housing developments.

Meanwhile, the company expected the macroeconomic environment to continue playing a significant role in the mid- to high-income residential market, adding that it expected the current slowdown to continue for the next year.

A turnaround in the residential property market, however, could start again in the near-term.

The company’s net profit declined by 80,8% to R6-million in the year ended February 28, 2009, compared with R31,4-million the year before, while diluted headline earnings a share were down 43% to 15,57c a share, compared with 27,55c a share for the 2008 financial year.

Its revenues had declined by 26,4% to R233-million in the 2009 financial year, compared with R317-million the year before.

However, the company had restructured its balance sheet, which had helped to contain the overall declines in operating profit and headline earnings, Calgro stated.

The company was now better structured to handle the added pressures exerted by the global economic crisis, the developer added.

It had also improved its cash generation to a positive R68-million, compared with a negative R289-million the year before. The company had also settled R20-million of debt during the financial year.