MARKETING AFRICA MAL 18/17 mal 18:17 online | Page 39

should ensure that the developer is
a registered company in the country
of operation and it has the legal
mandate to operate as a real estate
developer and the location of their
offices. He/she should also know who
the directors of the company are,
how they have delivered in previous
projects and if they have any court
cases with regards to the services
they are currently offering. This will
prevent one from investing with a
brief case company run by fraudsters.
Development history and
testimonials: The buyer should also
review previous developments done
by the developer to gauge their
workmanship, delivery on promise,
timelines and as proof that they are
actually developers.
Mode of operation and project
financing: The buyer should then seek
to understand how the developer
operates, what their day to day
activities are, how information is
relayed to clients, and how the
payments are made. In case any of
the procedures, partners they deal
with or operations are not above
board, he or she should not work
with the developer. They should also
understand the nature of finance
being used by the developer and
hence the possibility of a project
delaying due to lack of financing.
Developers associations: For instance, in
Kenya, credible developers are members
of the Kenya Property Developers
Association (KPDA), which advocates
for better market conditions for both the
buyer and the developer.
Project Due Diligence
For the project, the buyer ought to
establish the following facts:
Visit the site: The buyer should visit
the site to know it is an actual site
that exists. This should be done prior
to any investment and throughout
the development period to ensure the
development is running smoothly
and he/she is up to date with the
progress of the development, so that
if any issues arise, they can follow up
with the developer or consider exit
options before it is too late. Those
who lost money in Simple Homes
made deposits without visiting the
sites; you should never part with even
a penny before visiting the actual site
or confirming it is a legitimate site
for development.
Confirm developer has land titles
for the given site: The buyer should
always insist to be given copies of the
title as proof that the developer is the
owner of the land and it is not a scam.
He/she can also run a search on the
title to ensure it has no undisclosed
encumbrances and it is genuine.
Project plan approvals: The buyer
should also seek to know if the
developer has obtained the necessary
approvals for the property and hence
has the legal right to develop the
property to prevent delays in the
delivery of the project.
Project team and their delivery
history and capability: The buyer
should also know who is in the
project team, their previous
experience and hence gauge if they
are able to deliver the given project.
Get regular updates from the
developer on the progress: This is a
must to ensure that the development
is ongoing and will be delivered on
time and will be of good quality. A
developer who doesn’t give regular
updates is suspect could be hiding
crucial information or is fraudulent.
Comparative Analysis: Research
on comparables around the area to
gauge possibility of earning potential
returns promised by the developer.
That is rents, prices, yields, occupancy
and uptake. This also helps the buyer
know if the development is over-
valued and can hence look for better
investment opportunities. A good
developer should be able to share
at least a summary of their research
findings with the buyer.
Timelines: The buyer should understand
the project timelines and milestones and
hold the developer to them.
Project design team: Seek to
understand credibility of the project
design team including the architects,
engineers and the main contractors.
Contracts Due Diligence
The buyer should hire a conveyancing
lawyer to review all contracts signed
and ensure they are all above par and
he or she is not defrauded in any way
or exposed to unnecessary risk.
Last but not least if it’s too good
to be true … there is no free lunch!
In the current market due to the
high land and construction costs as
well as interest rates, house prices
are generally high. Hence if a
developer offers a house at a price
that is very low by market standards
and not achievable under normal
circumstances, and it is the only
company offering such, then one
should be cautious and evaluate them
fully as it is probably a scam to lure
unsuspecting buyers desperate to
acquire a home.
Purchasing off plan is a great way of
acquiring real estate and hence the
buyers should not be deterred by the
few cases of unethical developers
as they wi