Why location is of prime importance

generating either sole or residual income. In my previous article, I emphasised that profit in property development is attained on the initial purchase of the property and not just on resale after value addition.
I also explained instances where it is still appropriate to purchase the property above market average and still be in a position to make a profit off the property on resell.
As a continuation from my previous article, I am going to list some other issues one should consider when intending to venture into property development.
One of these factors has to do with the age-old real estate adage “location, location, location”.
One can never overstate the importance of location in property development. Like all real estate investments, a good location will almost guarantee a good return on resale.
However, a property developer cannot limit themselves to prime locations, which in most cases are already too expensive and highly sought after.
This will certainly deplete the bulk of the development budget resulting in most cases with objectionable compromises on the quality of work of the intended development.
Since the whole thrust of property development is the creation of value, sometimes it is best to identify areas on the fringes of sought-after areas and develop them.
Here one benefits from lower purchase prices and can still maximise on sale price because of benefit of proximity to essential services.
Thus, a developer worth his salt must not just focus on locating prime land, but develop an eye for creating prime land from previously common areas.
A look at Borrowdale Brooke will make an interesting case study. The previous farmland was located at the fringes of the Borrowdale area and did not command as much value as the areas within Borrowdale that where fully developed and closer to essential services.
However, the developers successfully created a hype based mainly on exclusivity and high-end property development, now even land price within the development per square metre commands more than in most parts of Borrowdale.
Other developments like Shawasha Hills, Carrick Creagh are following suit targeting the high end of the market.
It is also necessary to evaluate the impact the newer areas like Zimre Park, Damofalls and Windsor Park have had first as developments.
They are having a steady but rising appeal and value retention resulting from their appeal to the middle class and the Diaspora market.
Some developers only focus on developing low-cost housing, which serves the majority of our potential buyers, and never lack demand.
If the development is to offer commercial services then sometimes an investigation into the requirements of people who have to travel distances to acquire essential services might be necessary.
One should not just stop there but also investigate other motivations that will lure them to travel to those same places even if a commercial property is erected in their locality.
In commercial situations, an engagement of professionals either for market analysis or investment advice is a prerequisite.
The same principles applicable for these grand developments also apply to small-scale developers.
This includes those that seek to improve individual residential/commercial properties or small tracts of land.
To maximise on property development, one has to develop an acute eye in identifying motivated sellers of properties.
This is because the developer has to ensure that a property purchased for the sole purposes of developing must be bought at the lowest possible cost.
This can be a deceased estate, a property at the centre of a divorce or any other form of delinquent property.
Upon identification, it is imperative that one moves with speed to make sure that one secures the particular property.
It is not sufficient to just focus on identifying a motivated seller one also will have to keep in mind the kind of buyer that will be attracted to the property after value addition.
It is comical how some developers are high minded when building the outer shell of the property and how they all of a sudden become frugal when it comes to the furnishing the property.
It is best to keep in mind that when viewing a property, buyers are as much attracted to the subtle finishes as they are to the structure itself.
So when developing a property, one has to think from the mind of the targeted buyer.