Copyright ©2024 | SME South Africa | Designed and Developed by Adclickafrica
Copyright ©2024 | SME South Africa | Designed and Developed by Adclickafrica
Updated on Nov 15, 2024
Buying an asset to increase its value can be risky, but it is a worthwhile business venture. When it’s done in property, it’s called property development.
Developing property is no easy feat. You need to buy it, improve the property and then put it back on the market to sell or rent.\
Property development, also known as real estate development, is the process of taking a building or land to develop it and raise its value. The business of property development has a number of features. This includes building a new property, renovating an existing one, or changing several properties to serve new purposes.
According to Statista, the South African real estate market is expected to reach $1,19 trillion this year. Residential property is the most dominant within the real estate market, with an expected market value of $0,82 trillion this year.
These numbers showcase the growing value of the property market in South Africa. If you want to get into property development, now is the best time. Many people are looking for homes, student accommodation, apartments and commercial spaces, making it ideal to explore.
In this guide, we explore the different aspects of property development in South Africa.
Before we get into property development, we need to look at the different types of property ownership. Some of the common types of property ownership include:
This is the most common type of property ownership. Full-title ownership is when you own a property outright and have complete control over the land and any structures on it. If you want to control what happens with and on the property, this is the ideal type of ownership for you.
Sectional title ownership is popular amongst people looking to purchase an apartment or townhouse. Typically, you would own a unit within a complex as well as a share in the common property which usually includes the garden, swimming pool and other common areas.
Long-term rental is basically when you rent a property whether residential or commercial. While you are renting the property you have the right to occupy it and use it as if you own it. This type of ownership is typically less expensive than others.
These are the most common types of property ownership in South Africa. Now let’s look at the different property developments in South Africa.
Residential property development consists of a wide range of projects. These can range from single-family homes, and apartment complexes to master-planned communities and age-restricted developments.
In South Africa, most residential property developers look to not only make a profit but also provide affordable housing to people, these are called affordable housing projects. The most known affordable housing project in South Africa is the government’s.
Affordable housing projects
Social Housing Programme
The Department of Human Settlement has a range of affordable housing programmes already in progress. One of those programmes is the social housing programme. Under this programme, potential renters are provided with rental accommodation for the upper end of the low-income market (R 1 500 – R 7 500). The objective of the programme is to provide grant funding to establish, capacitate and take advantage of any social housing projects which may develop.
First Home Finance Programme
The government’s first home finance is also one of its affordable housing programmes. Under the programme applicants from poor and low-income to middle-income households are provided with access to adequate housing. Applicants must not qualify for fully subsidised house and mortgage loans. These are families earning between R 3 500 to R 22 000 per month.
The subsidy from the First Home Finance programme may be used for the following:
Enhanced People’s Housing Process Programme
This programme aims to help households who want to develop their housing subsidies by building their own homes. You can access the programme through the Integrated Residential Development Programme, Project Linked Consolidation, Institutional or Rural Subsidies. Unlike other housing programmes, this one lets you build or organise the building of your home. Additional funds are also available to you if you need to pay for support functions.
How to Qualify for Government Housing Subsidies
To qualify for the government affordable housing programmes, you must meet the following criteria:
What You Need to Apply
To apply for the affordable housing programmes, you will need to submit the following documents:
To apply for a government housing subsidy, you can go to your local Department of Human Settlement offices or your local municipality. Alternatively, you can send an e-mail to info@dhs.gov.za or call 0800 146 873.
A luxury residential complex is a type of residential housing which provides high-end amenities, high-quality finishings and views from balconies and a range of conveniences. Some of the most popular luxury residential complexes in South Africa include:
Luxury residential complexes are generally more expensive than normal complexes. They are considered luxury not only because of the amenities but also because of their location. Prime real estate development includes picking a location (in the city or the country) which will significantly boost the value of your real estate project.
Mixed-use properties are those that provide a range of spaces to the residents. Most commonly they provide residents with residential, commercial and recreational spaces all within a single development. In South Africa, some of the mixed-use properties include Jewel City in Johannesburg and Devonbosch in Stellenbosch.
Mixed-use properties are great for investors. They present as an attractive option for investors because they will provide you with a steady income and they have a positive return on investment (ROI).
For businesses, being in a mixed-use property can increase their foot traffic and visibility. It also means you will have a consistent customer base as people come and go.
Commercial property development is made up of a range of factors. Typically, it includes everything from retail stores, food outlets, office blocks, hotels to petrol stations. In South Africa, some of the most common commercial properties are retail spaces, business parks and office spaces.
Retail property is commercial real estate which is used for selling consumer goods and services. Retail property is not only shops, but it can also include restaurant space and offices. Retail spaces range from single-tenant spaces to shopping centres and large shopping malls.
For business owners, retail space prices can vary depending on the location. If the retail space is in an are without easy accessibility and few renters, the space will be cheaper to rent. If the space is in an area where people can get to it with private and public transport and in a business district, the rent will be higher.
Business Parks
Business parks in South Africa are situated in prime business hubs. These parks offer business owners an opportunity to get an office of any size to suit their business needs. The office parks range from 2 to 3 building setups to complexes of up to 40 buildings.
For business owners being part of an office park has many advantages. Business parks can offer shared costs which reduce operating expenses, you only pay for your share of services such as security, garden maintenance, property management and the upkeep of the common area(s).
You can find available business park space by visiting any real estate company. Alternatively, if you want to acquire your own business park, visit a real estate company or any auction events happening.
Office Spaces
Office spaces are similar but different to business parks. Typically, office spaces include a welcome entrance zone/receptionist area, an in-office coffee shop, diverse meeting rooms, open office plans and collaboration zones. These features make office spaces great for productivity and create an employee-centred environment.
As a business owner, you have many choices when it comes to office spaces. You can rent an office space in a business park, or you can book an office space in co-working office spaces such as WeWork.
Industrial properties are designed to accommodate manufacturing, processing, warehousing and distribution. They are different to commercial properties in that they are larger and more open. Additionally, they are made to accommodate heavy machines, production equipment and storage facilities.
With the growth of e-commerce, there is a growing demand for logistics and warehousing space. According to research, the industrial property market is expected to reach £641,1 billion by 2027. The warehouse and distribution centre market is growing at a compound annual growth rate of 12,5%.
Industrial property is a good investment because it presents investors with economic diversification, reduced risks, and a steady cash flow. In addition to that, this investment comes with long-term appreciation bringing investors steady returns and balance to their portfolios.
With all this property development happening, the upside is that it does create jobs and positively affects the economy. However, the downside is the effect it has on the environment.
As more people develop properties, the environment is affected by it. In South Africa, we are lucky to have large land space to develop not only property but also develop our farming industry in the same breath.
To help companies stay sustainable when building, the Green Building Council of South Africa (GBCSA) helps them by advancing sustainable practices in the property and construction sectors. The organisation also helps businesses get their green building certification.
When it comes to green building practices, in South Africa businesses prioritise natural ventilation, use of sustainable materials, leveraging of energy-efficient technologies and the implementation of water and energy conservation measures.
Renewable Energy Integration
A key strategy in South Africa is the integration of renewable energy resources. These include solar panels and geothermal systems into properties. This helps promote sustainability and reduces any reliance on non-renewable resources.
By integrating renewable energy resources into your office building, your business aligns with the government’s commitment to sustainability and renewable energy goals. You will not only reduce the impact on the environment but also your business will appeal to eco-conscious investors.
Green Building Certifications
Green building certification means that your building has undergone a robust and strict technical assessment and met the set-out benchmarks. Under the GBCSA, there are six steps to follow to get your green building certificate.
Step 1: Choose which rating tool to use to certify your project. The GBCSA has three rating tools namely, Green Star (highest rating), GBCSA Net Zero/Net Positive and EDGE (Excellence in Design for Greater Efficiencies).
Step 2: You must appoint an accredited professional who is qualified in your chosen rating tool.
Step 3: Register your project with the GBCSA through its online platform.
Step 4: Submit your documentation. The accredited professional you appointed will do this for you.
Step 5: Get your project certified. This happens after a panel of sustainability experts at the GBCSA assesses your application.
Step 6: Once you have received approval, your certificate and building plaque you can promote your achievement.
By following these steps, you will be able to proudly showcase how sustainable and environmentally friendly your property is.
Water Conservation in Property Development in South Africa
In South Africa, there is a big shortage of water. South Africa is rated the 30th driest country in the world and with an ever-growing population, there is a need for property developers to implement water conservation methods within their properties.
You can play your part in water conservation by incorporating sustainable water management practices within your construction projects. You can do this by implementing water-efficient fixtures, rainwater harvesting systems, wastewater recycling sources and integrating technologies such as greywater recycling systems within your building.
Using this guide you can explore property development in its entirety. Whether you are looking to find commercial or residential space or looking to build your own buildings, this guide can help you.
Copyright ©2024 | SME South Africa | Designed and Developed by Adclickafrica
Copyright ©2024 | SME South Africa | Designed and Developed by Adclickafrica