Real Estate Investor Magazine South Africa October 2018 | Page 30

DEVELOPMENTS
How to Choose a Great
Location for
Real Estate
Development
BY BARRIE SWART
E
very potential property investor wants to own a piece
of real estate that will ensure long-term capital growth,
but how exactly do you go about finding it? It may be
well worth buying a beachfront property in a sleepy little town
and wait for it to boom, but finding the next Paternoster is not
as easy as it sounds.
Decide your budget
Firstly, decide how much you can afford to spend and how
big the return needs to be for the investment to be worth your
while. Chat to a broker and your lender of choice before you
even start logging on to shop. Once you have a figure in mind,
start phoning estate agents and asking which properties they
believe will match your budget and your investment goal (in
terms of equity or rental income).
Pick your pocket
Most suburbs have “preferred pockets” in terms of popularity.
Suburbs that are popular now will likely spread to surrounding
areas, and the less sought after pockets will grow in value. It’s
also well worth signing up to sites that track pending building
projects – if a school or mall or transportation system is in the
works, you may want to start shopping for real estate in the
area. It’s important to ask the right questions – what do people
prefer to buy or rent in that area? Townhouses, freestanding
homes, flats? What is the expected population growth for the
area? What are similar dwellings renting and selling for?
Look at the view
Seafront properties will always have value. With beachfront
real estate, towns often enjoy a small boom, where after the
municipality may become over-zealous and start overselling
plots in order to cash in. As the plots lay vacant, the prices
drop – and that is the time to buy. A home by the beach also
has the added bonus of earning holiday rental income. But
short of finding that holiday spot, aim to purchase in an area
with easy access to the CBD and major freeways. The more
accessible an area is to a major employment hub, the greater
the demand will be.
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OCTOBER/NOVEMBER 2018 SA Real Estate Investor Magazine
Don’t go straight for the city
Capital cities are pricey investments – land, building costs
and professional services are already at a premium, and the
competition will be fierce. Instead, look at some outlying areas
1-2 hours’ drive from the city to cut your teeth on. Look for a
space that is popular with tourists or undergoing gentrification,
where the population is expanding or employment is on the
rise, or where retailers have announced they are extending
their presence to.
Research, research, research
Set alerts up on online classifieds, follow project development
and tender websites, sign up for the local paper and follow the
neighborhood watch and police reports. They all contain crucial
information that will enable you to follow the infrastructure
and the subsequent increase in rental/sales demand.
Look a little deeper
It’s important to look at the undesirable qualities a property
has as well. Too many good investments have (literally) sunk
because of an underground water source that caused cracking
and damage after time, or because a particularly foul-smelling
enterprise opened up nearby. A geotechnical assessment as
well as a physical assessment of the area will save you a lot
of trouble in the long run. If the slope of the block is too flat,
you may end up with flooding issues, while a very steep slope
is going to be trickier to build on. Likewise, mature trees
are going to be expensive to move. The house itself doesn’t
necessarily matter – look at the size of the lot. The house itself
will always depreciate and require maintenance, whereas the
land value will keep increasing. Choosing a bigger or better
situated plot will always beat a prize home.
All real estate investments are risky and pay off over the
long run. Take your time to ensure you pick the right one.
SOURCE
Gumtree