Day in and out, urbanization grows, and there’s the need to restructure facilities to meet the needs of residents. Therefore, this article will serve as an educative model to enlighten our readers on how to start a property development business in South Africa.
So, we implore you to keep reading because the necessary information to guide you through your business commencement, running, and management awaits you in the next chapters of this guide.
The property business is at its peak due to the rise in industrialization and high growth in urbanization.
South Africa is arguably one of the most developed countries in sub-Saharan Africa, and the country is seeing more growth in every sector, making the property development business the most lucrative among others.
There’s a high demand for properties that meet students, high-paying class, and middle-class needs.
Also, the emergence of new communities in some parts of the rural areas is all contributing factors to the success of the property development business.
The property development business investor adopts two (2) strategies, and they are:
1. Develop to sell: in this business strategy, the projects are solely developed on the mission to sell after completion for a fair profit
2. Develop to hold: projects are developed and rented out to tenants for a consistent cash flow
The chapters that follow are the basic requirements, factors, and pieces of detailed information that will guide you through your property development business journey.
What You Need To Start A Property Development Business In South Africa
To start implementing whatever ideas you have in mind about the property development business in South Africa, consider the following basic requirements as a guide to help commence your business:
1. Knowledge In Property Development: it is advisable to gain the knowledge and skillset in running a property development business before you start investing in your business plans to prevent making unnecessary mistakes
2. Business Plan: strategize a business plan that meets your financial capabilities, your business plan is the determinant of your true success or failure in the business, and therefore a good business plan is required to prevent getting stuck in the middle of business operation
3. Build a Team: you’ll need a team of professionals because a lot goes into the planning, documentation, building, marketing, and other aspects of the business. Therefore there’s the need to build a team with professionals like architects, property agents, quantity surveyors, ton planners, attorneys, etc.
4. Location: your choice of location for your business is one major factor to be successful in the property development business. Learn how to spot a good location that has good marketing potential
5. Land acquisition: choose the right channels in acquiring land from owners, perform all the legal documentation to prevent any form of disputes
6. Zoning: zone your land at the local municipality to understand what it can be used for and what structures can be built on your land, the South African law states that zoning is a requirement to meet for building townhouses in the country
7. Business Registration: register your business with the Companies and Intellectual Property Commission (CIPC). For tax registration, contact SARS
Also, you can register under the Construction Industry Development Board (CIDB) after launching your business and having a good history of completed construction projects, and the CIDB certification allows you to be offered construction projects in the public sector.
8. Market Research: conduct market research into the business, when and where the market is good are some good answers to seek
9. Join Building Associations: it will be a good decision to join the National Home Builders Registration Council to gain professional servicing of your construction projects
10. Building Regulations: it is advisable to enlighten yourself with the building regulations in South Africa because building inspectors can halt your project when you go contrary to the rules that govern building townhouses
11. Property Management: Strategize a good property management plan, and this is to ensure that your property is always in good condition to attract tenants
12. Project Advertisement: choose effective advertising platforms that can project your works to the South African public for more customers. Local newspapers, social media, business website, are some of the effective advertising platforms to choose
13. Pricing: know that high pricing drives away customers, and low pricing can shut down your business, so always place your prices in a range that will keep attracting clients and support your business growth
How Much Does It Cost To Start A Property Development Business In South Africa
The cost involved to commence, run and manage a property development business in South Africa differs depending on the kind of services you intend to offer.
Constructing business offices, companies, and industrial projects come with a higher cost than townhouse projects. Therefore, your financial strength determines what you can start.
Is The Property Development Business Profitable In South Africa
The property development business is only profitable with good managerial skills and knowledge.
Make your business a profitable venture by knowing the market requirements and what you can provide for the market.
Best Places To Start A Property Development Business In South Africa
Below are some of the best places to choose when setting up your property development business:
1. Newly emerging communities
2. Newly emerging cities
3. New sites in the cities
4. Cities with modernized structures
How To Make A Property Development Business Profitable In South Africa
The following are some guidelines to help run a successful property development business in South Africa:
1. Good relationship with the team
2. Effective teamwork
3. Meeting customers needs
4. Good staffing
5. Right choice of business location
Challenges In The Property Development Business In South Africa
Below are some of the challenges in the property development business in South Africa:
1. High cost of technology in construction projects
2. The business is capital intensive
3. Every aspect of the business requires professionals to function
4. Loyal team players are hard to find
Benefits Of Setting Up A Property Development Business In South Africa
The list below are some of the benefits gained in setting up a property development business in South Africa:
1. A successful property development business comes with a handsome profit
2. Job creation
3. Cut down of unemployment
4. Generates income for the government
5. Helps in developing urbanization
6. Development and improvement in industrialization
That is the information we can provide on how to start a property development business in South Africa.