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3 things you need to know before buying vacant land

22 Sep 2015

Prospective buyers of vacant land for commercial or industrial property development often underestimate the true time and capital requirements involved.

Nussey says costs associated with the purchase and development of vacant land include land survey costs, maintaining the land to an acceptable standard and obtaining a building permit, above and beyond regular rates and municipal charges.

This is according to Lloyd Nussey from Baker Street Properties, who identifies three main aspects for prospective buyers to consider:

1. Cash is King

To be eligible to buy vacant land, major banks and financial institutions typically require that the entire property be paid cash, and if not, a significant portion thereof.

The reality is that banks are generally quite reluctant to grant 100% bonds on vacant land, and furthermore considering the cash flow dynamic involved, Nussey says the prospective investor needs to be reasonably “financially sound” before considering buying land for further development. 

2. The time and costs involved

The process of buying vacant land takes some careful cash flow planning. Depending on your intended plans for the development of the vacant land, banks typically offer finance systemically as a particular building project progresses.

Nussey says costs associated with the purchase and development of vacant land include land survey costs, maintaining the land to an acceptable standard and obtaining a building permit, above and beyond regular rates and municipal charges.

Furthermore, he says if your building plans do not comply with zoning restrictions or you want to apply to have the land rezoned from, say residential to commercial, there are further costs and valuable time involved in getting approval from local council - time which costs money and needs to be budgeted for.

This vacant land for sale in Airport Industria is situated in Falcon Crescent, a central location close to all major arterial routes including Borchards Quarry Drive, N2, N1 and R300. It is approximately 1 199sqm in size, and offers prospective investors the option to use the area for development of a warehouse, distribution centre, office block or yard space. It is selling for R2 517 900 - click here to view.

There are exceptions, such as the prime vacant land currently for sale in Falcon Crescent, Airport Industria, which offers prospective investors great flexibility with the option to us the area for a warehouse, distribution centre, offices or yard space at R2 100 per square meter. 

3. Location, location, location

The well-known importance of location applies more to vacant land than any other type of property, says Nussey.

Before investigating any vacant land for sale, it is important to clearly stipulate your business objectives and goals you want to achieve with the vacant land.

A logistics operation typically requires secure, central access to main arterial routes, whereas a retail operation needs to be closer to its customers with ample parking.

“For example, vacant land for sale in Airport Industria offers central access to the N2, N1, R300 and Borcherds Quarry Drive, making it ideal for an established logistics company.”

Furthermore, it is important to know what is going on in and around the area as new or adjacent developments may influence resale value of the property and business, he says.

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