Real Estate Investor Magazine South Africa October 2013 | Page 40

DEVELOPING

BY TONY COLLINS

Your Needs And Objectives
The development process

PART 2

T

and objectives set for the project. A further
consideration would be the assessment of any
community and political resistance to the
project and the magnitude thereof.

At t h is st a g e t he de v elop er a nd t he
consultants need to assess and def ine their
legal, f inancial, managerial and technical
capabilities for comparison with the scope

The investor begins by conducting an
analysis of his own needs on the basis of
which he then formulates his own criteria
for selecting and eva luating investment
oppor t un it ies. However, t hough needs
differ with investors, they can be formulated
in terms of the following considerations,
namely:
• Expected yield or return on capital;
• Liquidity of the investment;
• Risk attached to the investment;

he first step in assessing the investor’s
needs and objectives is to define the
developer’s goa ls and objectives,
which are obtained through discussion prior
to establishing uses for sites or sites for uses.
The developer’s objectives will differ as the
private developer will be driven primarily
by the economic principle while government
bod ie s a nd wel fa re org a n isat ions w i l l
consider the social costs versus the social
benefits as well.

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October 2013 SA Real Estate Investor

Return on capital to investor
the future benefits that would accrue to the
investor are referred to as the yield, or return.
Four investment approaches in particular can
be distinguished in terms of the type of yield
return obtained from possession of property.
These approaches are:
• Investment for own use;
• Investment for regular income;
• Investment for capital growth (primary
objective is selling);
• Investment for amassing an estate.
The investor could however have different
combinations of the above approaches in mind
when acquiring an investment property.
Although many investors may say that they
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