adminexpected to go forward due to continued recovery in various sectors including property development, which is expected to experience a boom in coming months and years.
This is the norm with most recovering economies. On one hand, there is Turnall projecting US$300 million profit by 2015.
This is a staggering figure given that many in our country are focusing on bread and butter issues.
This article is intended for those who dare to dream and would like to benefit when the inevitable property boom arrives.
Property development according to Wikipedia is a multifaceted business, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of improved land or parcels to others.
Developers are the co-ordinators of the activities, converting ideas on paper into real property.
Developers usually take the greatest risk in the creation or renovation of real estate and receive the greatest rewards.
Developers purchase a tract of land, determine the marketing of the property, develop the building programme and design, obtain the necessary public approval and financing, build the structure, and lease, manage, and ultimately sell it.
Developers work with many different counterparts along each step of this process, including architects, city planners, engineers, surveyors, inspectors, contractors, estate agents and more.
One can easily choose to become a small developer whose focus is on small tracts of land where one builds houses or improves houses for purposes of generating a profit later.
This is the crux of property development. Its simplified definition is adding value or creating value on property.
There is a prevailing misunderstanding by some supposed “property developers” who feel that just because their property has gained in value over time, they now qualify to be called property developers.
It is completely misguided because in most instances surrounding properties will also have gained in value thus nullifying the supposed gain, as one cannot replace the property with a better or similar property on sale.
A real developer will still make a profit after increasing value regardless of whether the market is in a slump or boom.
This might at first glance seem vexatious but it is critical to understand that a seasoned developer makes profit at purchase of property and not after selling.
A seasoned developer makes a profit when buying because he pays the right price that is at or below the market average, which will certainly insure that when the time to sell comes, the developer has already pocketed a few dollars if the property is purchased at below market value.
It will be remiss of me to leave it at this without giving situations where paying above market values can make business sense.
Some situations might require inducements to property owners where they are in possession of prime land or property that when developed may bring a considerable or substantial profit to a developer. In such instances, it is not uncommon to offer to a property owner amounts that are above valuation figure as an inducement to sell.
However, such decisions should never be made indifferently without thoroughly researching or seeking professional advice.
Property development is capital intensive regardless of where one chooses to develop.
As such, it is critical to do thorough research in all situations and not when only buying at high cost.
A study of an area is a prerequisite; this may include its previous and future plans, success and failures of previous surrounding developments.
Any restrictive covenants or encumbrances attached with sale. Note which covenants will derail your development plans and which ones will ensure a good market value after development, thus a return on investment.
It is critical for any one intending to delve into property development to seek professional assistance. The door to wealth in property development is just as wide as the door to loss and despondency.
- Vengai Madzima is a property consultant and analyst with Wisdom Properties. He can be contacted on 0772 468093 email: vengai@wisdompropertieszw. com
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