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1. 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
2. Click to edit Master title styleClick to edit Master title stylePlanning Design IIIA Module
• The Development Process:
– Development feasibility
– Feasibility issues
– Development actors & roles
3. Click to edit Master title styleThe Development Process
Risk 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.
4. 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.
5. 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?
6. 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 Process
Feasibility Issues
8. Click to edit Master title styleThe Development Process
Feasibility Issues
Issues to consider for development feasibility:
1. Ownership constraints
2. Physical conditions
3. Public/Legal Procedures
4. Market conditions
5. Project viability
9. Click to edit Master title style
Issues to consider for development feasibility:
1. Ownership constraints
Financial
Multiple owners with different agendas
Reluctant to sell or undertake development
The Development Process
Feasibility Issues
10. Click to edit Master title style
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
The Development Process
Feasibility Issues
11. 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.
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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
The Development Process
Feasibility Issues
13. Click to edit Master title styleThe development process (cont)
3. Public/Legal Procedures
Title deeds Town Planning Schemes
SDFs etc
Planning application process EIA process
Social 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
14. Click to edit Master title styleThe development process (cont)
4. Market conditions
Local and global
economic situation
Correct location for development
Supply chain Labour – skilled and striking
Crime? Access to markets,
transportation etc
Need in the market
(demand dictates supply)
Desirability of the development
15. Click to edit Master title styleThe development process (cont)
Issues to consider for development feasibility:
5. Project viability
• Need to take into consideration all the other issues and
calculate whether all costs involved in developing are
worth it.
16. Click to edit Master title styleThe development process (cont)
• 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.
17. Click to edit Master title styleThe development process (cont)
• 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..
18. 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)
19. Click to edit Master title styleThe development process (cont.)
2. Land Owners
Influence development in the following ways:
i. By releasing or not releasing land
ii. By the size and pattern of land that they release
iii. By any conditions they may impose on the
subsequent form of development
iv. Through leasing as opposed to selling
20. Click to edit Master title styleThe development process (cont.)
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
21. Click to edit Master title styleThe development process (cont.)
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
22. Click to edit Master title styleThe development process (cont.)
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
23. Click to edit Master title styleThe development process (cont.)
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
24. Click to edit Master title styleThe development process (cont.)
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
25. Click to edit Master title styleThe development process (cont.)
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.
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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.)
27. Click to edit Master title styleThe 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
28. Click to edit Master title styleThe development process (cont.)
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
29. 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