Real Estate Investor Magazine South Africa October 2014 | Page 47
COMMERCIAL
Once you have taken an in-principle decision to embark on a property
development, it helps to follow a formula in progressing your
development smoothly.
STAGE
The following table contains the typical flowchart that a property
developer would use to conceptualise, design, finance and implement
a property development.
EXPLANATION
COMPLETE
Conceptualisation
When a development need arises or a development opportunity is apparent, a property
developer compiles a concept of the development.
Initial / High-Level Financial Feasibility
A financial feasibility determines the potential for the proposed development to remain
profitable.
Land Identification
The process of selecting a suitable portion of land for a proposed development.
Obtain Option Over Land Portion /
Right To Use A Land Portion
Before a property developer can develop a portion of land, (s)he must obtain control of the
land portion - either buying the land portion outright or obtaining an option to buy or use the
land portion.
Perform Land Due Diligence
The process of checking the title to the land, the zoning and the nature of the soil to ensure the
land is suitable for development and suitably zoned for development.
Primary / High-Level Design And
Layout
Create a layout diagram.
Assemble Project Team
The correct development project team is critical to success.
Obtain Detailed Design(s) And Layout
The process of drafting more detailed designs which can be costed.
Detailed Financial Feasibility Performed
The process of compiling a detailed income projection and a detailed costing projection.
Marketing Feasibility Performed
To ensure the development will be fully let, research the market for your proposed
development.
Socio-Economic Feasibility
This is a detailed analysis of the socio-economic impact of the proposed development on the
surrounding community.
Adjustment Of Design(s) And Layout
This process is necessary throughout the development process.
Update Detailed Financial Feasibility
The financial feasibility must be updated frequently to ensure that the proposed development
remains feasible.
Bank Loan Approval Obtained
The process of obtaining loan finance to finance the proposed development.
Final Appointment Of Project Team
The process of finalising your project management and project development team.
Town Planning Process Commencement
Your proposed development must comply with the zoning rights granted by the local authority.
Obtaining these rights is an intricate process.
Environmental Impact Assessment (EIA)
Survey Process Commences
An environmental impact study assesses the impact of the proposed development upon the
surrounding environment.
Conditions Of Establishment Are
Obtained
The relevant local authority passes the proposed development by issuing conditions of
establishment. These must be followed throughout the construction process.
Environmental Approval Obtained
If you have complied with the requirements of the environmental impact assessment, you will
receive a record of decision (ROD), which is necessary to commence construction.
The Services Are Installed
The bulk or municipal services (including: water, electricity, sanitation, waste water, rain water
and roads) are installed.
Marketing Of Development Commences
Once development commences, the marketing of the development should begin to ensure the
development is let prior to completion.
Services Handed Over To Local Authority
Once the bulk services are complete, the relevant local authority inspects these and takes
responsibility for maintaining these bulk services up to the boundary of your property.
Above-Ground Construction Commences
It is now possible to construct your proposed development from basement level to roof level.
Above-Ground Construction Completed
And Handed Over
Once your property development is complete, you are able to hand it over to your property
management division or your client (the owner).
Table 2: The property development process
www.reimag.co.za
RESOURCES
Courtwell Consulting
October 2014 SA Real Estate Investor
47