pdiiia lec 9 26.02.13

Click to edit Master title styleClick to edit Master title styleUniversity of Johannesburg

Faculty of Engineering and the Built Environment

Department of Town and Regional Planning

ND: Town and Regional Planning

Planning Design III A

Lecturer: Marion Frederiksen

Lecture 8: 25 February 2013

Click to edit Master title styleClick to edit Master title stylePlanning Design IIIA Module

• The Development Process:– Development feasibility– Feasibility issues– Development actors & roles

Click to edit Master title styleThe Development ProcessRisk and Reward

• Designers need to understand the balance between risk and reward involved in property development

• The risk refers to the fact that an entrepreneur (developer) will have to obtain money in order to create a product – usually from bonds

• The product could refer to anything ranging from the change of a low yielding land use to a higher yielding one or the improvement of a building

• The reward refers to the creation of labour, advancement of a body of knowledge (planning) and the attainment of a higher yield that was previously attainable.

Click to edit Master title styleThe Development Process

• Process of producing the built environment involves numerous “actors” all acting in their own interests e.g. engineers have different criteria to adhere to / different focus areas to an architect etc.

• It is the planner’s duty to act in the interest of the broader community.

Click to edit Master title styleThe Development Process Development Feasibility

Before embarking on any development project, property owners, developers and lending institutions need to be sure that the project meets a number of base criteria.

The objective of all parties - whether it is the developer or lender - will essentially be the same: is the project viable?

Click to edit Master title styleThe Development Process Development Feasibility

A feasibility analysis will help answer this fundamental question – is the project viable?

Are the opportunities and risks of the proposed development project ….in relation to the projected costs, revenues, profit potential and returns of the project worth the investment?

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Need to consider the following in order to undertake a development feasibility:

• Needs physical illustration - often use mapping service to illustrate this e.g. GIS

• MUST look at policy documents e.g. SDF proposals maps

• MUST examine title deeds!• Location and availability of municipal

infrastructure is one of the most constraints nowadays.

The Development ProcessFeasibility Issues

Click to edit Master title styleThe Development ProcessFeasibility Issues

Issues to consider for development feasibility:

1. Ownership constraints2. Physical conditions3. Public/Legal Procedures4. Market conditions5. Project viability



1. Ownership constraintsFinancialMultiple owners with different agendasReluctant to sell or undertake development



1. Ownership constraints cont…• Research indicates that the behaviour and characteristics of landowners

significantly influence the redevelopment prospects of vacant land and buildings.

• Owners reluctant either to sell/ undertake development themselves may frustrate regeneration initiatives.

• If such passive ownership creates or perpetuates urban decay and vacancy, it detracts from the quality or urban life. In contrast, active owners, who welcome or even initiate development contribute to urban regeneration and economic growth.

• Passive owners may undermine development potential, the full extent and the exact causes of passive ownership remain under speculation


Click to edit Master title stylePlanning Design• People often hope that their property value will increase

substantially and they will be the last property available for development which will fetch them higher prices.

• This strategy often backfires though and an island is created – i.e high density developments surrounding a single agricultural holding which has not been developed and the owner wanting too much (risk overplayed)

• The multiple owners problem is usually addressed by the policies and objectives of the relevant municipality, dictating to a large extent what type of development would be permitted. This is often out of the hands of the owner, although the decision to develop or not still lies with him / her.


2. Physical conditions

Access Contaminated Land /made ground

Geological Constraints e.g. Dolomitic areas

Within an environmentally sensitive area

Water resources – presence of aquifers, streams, wetlands etc

Right of ways / servitudes

Location in terms of the urban edge

Other environmental issues: ridges, protected species


Click to edit Master title styleThe development process (cont)

3. Public/Legal ProceduresTitle deeds Town Planning Schemes

SDFs etc

Planning application process EIA processSocial Impact Assessment – forms part of the EIA but not always done in SA – depends on scale and anticipated impact of the proposed development on a community (for dam building it would be prerequisite for example).

Heritage assessment for all structure over 60 years


4. Market conditions

Local and global economic situation

Correct location for development

Supply chain Labour – skilled and strikingCrime? Access to markets,

transportation etc

Need in the market (demand dictates supply)

Desirability of the development



5. Project viability

• Need to take into consideration all the other issues and calculate whether all costs involved in developing are worth it.


• Most development occurs through actions of private developers following approval of a development application.

• Developers have a key role in providing land and housing stock, as well as other privately owned facilities such as shops, offices and industrial buildings.


• As applicants, developers have rights under planning legislation, such as time frames for deciding development applications and appeal rights against some planning decisions.

• Developers have an incentive to push planning and zoning rules in order to maximise returns on investment BUT this can lead to conflicts about development proposals and what is acceptable to the local municipality and the broader community..

Click to edit Master title styleThe Development Process (cont)Development Roles & Actors

1. Developers can be subcategorised into three:

i. Serendipitous entrepreneurs – attain land fortuitously (e.g. inheritance or as sideline to their normal business

ii. Active entrepreneurs – anticipate changes (speculation) in land market and purchase thereafter sell land accordingly

iii. Structural speculators – act strategically and change land markets for their own benefit (e.g. banks – mortgages)

Click to edit Master title styleThe development process (cont.)

2. Land Owners

Influence development in the following ways:

i. By releasing or not releasing landii. By the size and pattern of land that they releaseiii. By any conditions they may impose on the

subsequent form of developmentiv. Through leasing as opposed to selling


3.Adjacent Land Owners

• Can assist development by supporting it• Can resist development but objecting to

proposals; not allow potential right of ways / servitudes over the land etc


4. Funders provide short term finance and are paid back upon the completion of a project• Can assist development • Can uphold development if valuation depts does not

deem project necessary, force huge interest rates etc

5. Investors provide long term finance and take over project upon

completion• Generally shopping centre and office

developments


6. Development advisors:• town planners, • architects, • Engineers• Surveyors• Geological - essential for any development requiring township

establishment• Environmental scientists• Project managers• real estate agents etc.• Traffic – depends on the use• Structural – ie. to take into consideration the recommendations of the

geological eng • Civil for flood line – floodline certification for townships• Electrical, roads etc – reticulation etc• Civils for most other things


7. Builders and contractors• Physically build the development e.g. Group Five• Not always the big guys – also a move towards

employing local people on projects to ensure that job creation takes place within the community it is supposed to benefit

8. Occupiers• The end user of the development


9.The Public Sector

• Government – regulate the land markets & have an important impact on land availability e.g. Dept of Public Works

• As local authority, they advise on and determine planning applications


10.The broader community

• The community has a key role in the planning and development of cities and towns and rights under planning legislation. When a new SDF, IDP etc proposed by the local council, there is opportunity for community comment.

• Also has the right to make submissions about some development applications and have appeal rights against some planning decisions.

• NOTE: some property owners want maximum flexibility in doing what they want with their land, and minimum flexibility for their neighbours. This can lead to conflicts about development proposals.


11.Key agencies

• Many departments, QUANGOs and other authorities have roles in planning e.g. Eskom.

• Generally applicants need to submit directly to these, however, each municipality has different procedures for consultation with specialist government agencies and departments (e.g. environment, infrastructure and heritage protection)

• Municipalities have direct responsibilities for implementation and enforcement under planning legislation, while others have an important influence on outcomes e.g. PHRAG.

• Some directly affect planning outcomes e.g. NEMA and GDARD.

The development process (cont.)


11.Key Agencies cont...

• Department of Agriculture where land is not excluded from the Division of Agricultural Land Act (Act 70 of 1970) – need their consent first, otherwise no determination of an application.!

• Look at specific conditions – if close to a provincial road – Gautrans (for Gauteng), if national road – SANRAL – also future provincial roads – need to make provision for these (i.e. positioning and building lines)

• If affected by railway line – PRASA; also servitudes in favour of Transnet for example

• Department of Education – they own a number of properties, but besides that they generally also comment esp in terms of new residential developments making provision for new schools

• Telkom – in case of servitudes


11.Key Agencies cont...

• DWAF – Department Water Affairs and Forestry – in case of rivers or other water sources – also where water use licences are required

• The various departments within the muniipality – a créche for instance – dept of health – also where food is served, becomes NB

• Liquor Board for liquor licences – regulation of 500m radius from schools and churches, no liquor store or place selling liquor permitted

Click to edit Master title styleReferences

http://www.estatemaster.net/blog/guide-town-planning-consultant-property-development-projects/

http://propertyupdate.com.au/property-development-guide-part-10-assessing-your-developments-feasibility/

http://www.esrc.ac.uk/my-esrc/grants/R000236081/read

PDIIIA 2012 Lecture Notes, Zenzile Mbinza, University of Johannesburg