Property Development Rights
The new credit act and recent interest rate hikes have curbed speculative investments and sales resulting in a slower rate at which properties are acquired and disposed of. "Investment in property and property development will still continue. With the higher cost of borrowing money and additional credit requirements, investors are more cautious of the "costs" in acquiring development rights." says SiVEST Director, Kavi Soni.
Property sales advertisements use the term "possible business rights". "can be developed for business purposes", "has existing rights" or "close to existing industrial development". These phrases are at times loosely used and misunderstood which has led many a purchaser into a sale which ultimately results in "the investment of a lifetime" often becoming their greatest nightmare! The acquisition of property rights or development rights is not straightforward nor guaranteed. The applicable legislation, time periods associated with the limited capacity at local authority and provincial government level, objections and due process, all have an impact on the acquisistion of rights and the viability of property development. It is worth noting that a property owner can make a development application, however, the local or provincial authority is not obliged to approve an application. Whilst you have the right to apply, the Authority is not obliged to approve!
"It is therefore recommended that prior to commencing with a development application or committing funding to a development, it would be prudent to investigate the prospects of a successful application with a specialist in the development field. Also ensure familiarity with the applicable legislation and associated processes, factor in the holding costs of the time frame milestones to be achieved, and then make an informed decision." stated Kavi Soni.
Property investment and property development is not straightforward and there are no guarantees!