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Cape Town water crisis and the future of property developments

09 Feb 2018

The ongoing proliferation of property throughout Greater Cape Town has put strain on every one of the municipal systems.

Roads, electricity, sewerage and, most notably, water. As a result, there is now a serious shortage of property development throughout the area because new sites cannot be serviced.

For reasons we all understand, the shortage of water is now the main challenge, and its alleviation is absorbing an ever larger proportion of the city’s resources.

“Until recently the biggest challenge facing the municipality was to provide sufficient sewerage networks. However, for reasons we all understand, the shortage of water is now the main challenge, and its alleviation is absorbing an ever larger proportion of the city’s resources with the result that service delivery is falling behind in many areas,” says Rowan Alexander, Director of Alexander Swart Property.

This situation and the many uncertainties surrounding it foster uncertainties and make it difficult for developers to go ahead with new projects.

“Cape Town developers are now seriously short of greenfield (totally undeveloped) sites that they need. If and when they do get them they can seldom be sure when they will be given the necessary services. Future service capacity in Cape Town can these days very seldom be guaranteed to meet any specific deadline,” says Alexander.

If a developer opts (and gets permission) for taking over agricultural land, this can pose particularly challenging conditions.

The developer may have to accept long delays before getting planning permission and the fact that in most cases no fixed date can be given for the provision of services.

In these circumstances, the recent changes in municipal bylaws have provided a very welcome partial solution. They have encouraged developers to adopt new trends and to move towards brownfield developments, i.e. those in existing built up areas, where redevelopment projects are feasible.

A new ruling in this respect, which shows the City of Cape Town's support of densification is that which now allows second dwellings on single residential properties.

“These are not only allowed, but encouraged by the Cape Metropole in designated areas, especially if they involve ‘densification’, increasing the number of people the property can accommodate,” says Alexander.

A significant new ruling in this respect, which shows the City of Cape Town's support of densification is that which now allows second dwellings on single residential properties.

Alexander says the swing to densification is generally to be welcomed because it almost always results in more people being able to live in an area and aesthetic improvements to the precinct. It also relieves the pressure on greenfield sites and makes decision taking by the developers a great deal easier.

They now start with a project already supplied with a service infrastructure that can usually be upgraded and existing buildings which can be transformed and added to.

“In addition, on these projects they face less risk because the timeline to bring the project to completion is far shorter than on most greenfield projects. In today’s uncertain economic climate, developers fear to plan three or four years ahead. They are increasingly insisting on a quick turnaround and return on their investment,” says Alexander.

Alexander says their senior staff have devoted time and resources to identifying sites suitable for development. They are now appealing by means of advertising, Facebook and other methods to property owners in the Northern Suburbs, Tableview, Parklands, Paarl, Stellenbosch and Somerset West to consider whether their properties may have the potential for development or redevelopment.

If they need advice on this subject, Alexander says they are more than willing to provide it and will enjoy doing so.

“Work of this kind is very satisfying and it is always surprising to me how many property owners do not realise just what excellent opportunities their sites can present to a developer,” says Alexander.

“We have contacts with both the development and the financial communities, and therefore can play a very important role in getting new projects on the go.”

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