Property Development Feasibility

Every development scheme rests on an assumption about what the land will support. Our planners test that assumption against the zoning, the title deed, the Spatial Development Framework and the engineering services actually available at the boundary; before a purchase price is agreed or a design brief written. In our experience, schemes rarely fail on the concept. They fail on something that was knowable at feasibility stage and was not checked.

A feasibility study answers one question: what will this land actually support, and what would it take to get there. In our experience, these are the clearest triggers.

A due diligence period is usually the last moment at which the answer is still cheap. After transfer, what the land will not support becomes your problem rather than the seller’s.

Three engagements, each answering a different question: is this land worth acquiring, what does it legally permit, and how should the completed scheme be held.

Five areas, established from source documents and from the municipality, not from what the seller or the agent has represented.

What the scheme currently permits: use, density, coverage, floor area ratio, height, building lines and parking and what would have to be applied for to change it.

Registered conditions restricting use or building, servitudes crossing the property, and reversionary or mineral rights that survive transfer.

Whether the intended use is supported by the municipality’s Spatial Development Framework and precinct policy. A scheme contrary to adopted policy carries materially higher approval risk.

Whether water, sewer, electricity and stormwater capacity exists at the boundary of the property, and what upgrades the municipality would require.

The contributions payable as a condition of approval where the scheme increases demand on municipal infrastructure.

Development charges are the line most often missed. They attach as a condition of approving a land development application, they are calculable at feasibility stage, and on a dense scheme they can run to a material share of project cost.

A feasibility runs in five phases. Most schemes that are going to fail become visible in the first two.

Phase	Due diligence	Feasibility study
Rights review	Included	Included
Policy alignment	Summary	Full assessment
Services and constraints	On request	Included
Development scenarios	—	Included
Development charge estimate	—	Included

In our experience, the four below account for most schemes that stall after acquisition. Every one of them is establishable before transfer.

The municipality cannot service the scheme at the intended density, and the upgrade cost falls to the developer. Discovered after transfer, it is usually unrecoverable.

Contributions payable as a condition of approval can run to a substantial share of project cost. They are calculable at feasibility and frequently are not calculated.

Rezoning does not remove a restrictive condition registered against the title. A scheme can be correctly zoned and still be unlawful.

Where a proposal runs against the Spatial Development Framework, approval risk is materially higher regardless of technical merit.

None of these is exotic. They are the ordinary constraints on developing land in South Africa, and the cost of establishing them during a due diligence period is a fraction of the cost of discovering them afterwards.

We advise on development sites across the Gauteng City-Region, the Western Cape, KwaZulu-Natal and North West — in Johannesburg, Ekurhuleni, Tshwane, Midvaal, Mogale City, Cape Town, eThekwini and Mahikeng. Each municipality adopts its own Spatial Development Framework and sets its own development charges, and both are material to what a site is worth.

What developers, investors and funders ask us most often before committing to a site.

Tell us about the site and the scheme, and we’ll tell you what needs testing.

What are development charges, and who pays them?

Development charges are contributions a municipality imposes as a condition of approving a land development application, to fund the additional bulk infrastructure the scheme will require. They are payable by the applicant, and they are calculated on the increase in demand the development creates rather than on the property's value. On a dense scheme they can be substantial enough to change whether the project works. They are calculable at feasibility stage, and in our experience they are the line most often absent from a development budget until approval arrives.

What is the difference between a due diligence and a feasibility study?

A due diligence establishes what the land legally permits — zoning, title conditions, servitudes and existing approvals — and is usually run against a deadline in a sale agreement. A feasibility study goes further: it tests a specific scheme against spatial policy and services capacity, models what yield the land could realistically support, and estimates the development charges. Put simply, a due diligence tells you what you are buying. A feasibility tells you whether the scheme you intend is viable on it.

How do I find out what a property is zoned?

The municipality issues a zoning certificate, and the land use scheme sets out what that zoning permits. In practice the certificate alone is rarely sufficient: it states the zoning category but not the conditions attached to it, any consent uses or departures previously granted, or the title deed conditions operating alongside it. We establish all of these from source, because the difference between a zoning category and the rights actually attaching to a specific erf is where most acquisition assumptions go wrong.

Can I rely on the seller's or agent's statement of the zoning?

Not without verification. Sellers and agents represent zoning in good faith and are wrong more often than either would expect — usually because a previous consent or departure has been assumed to be permanent, or because a title condition has been overlooked. A misdescription in a sale agreement may give you a claim against the seller, but a claim is a poor substitute for a site that supports your scheme. Verification takes days and costs a fraction of the deposit.

How long does a feasibility study take?

A due diligence on a single erf is usually a matter of days rather than weeks, where municipal records are accessible. A full feasibility on a larger site takes longer, because services capacity has to be confirmed with the municipality and that depends on their response times. Where a due diligence period is running under a sale agreement, we work to that deadline — and will tell you at the outset if it is not achievable rather than after it has passed.

Can you tell me whether my scheme will be approved?

No one can tell you that, and you should be cautious of anyone who says otherwise. What we can tell you is how a scheme sits against the criteria the decision-maker must apply: whether the use is supported by the Spatial Development Framework, whether it aligns with the development principles in SPLUMA, whether the services capacity exists, and what objections it is likely to attract. That is a risk assessment rather than a prediction, and it is the honest form the answer takes.

What is involved in converting a building to sectional title?

Conversion requires a sectional plan, approval of that plan by the Surveyor-General, and opening of the sectional title register at the Deeds Office. Before any of that, the building has to be lawful: approved building plans, an occupation certificate, and zoning that permits the scheme. In our experience, unapproved alterations are the most common obstacle, because they have to be regularised before the sectional plan can be approved — which is why we usually run a plans check at the outset.

Have a site under offer, or a scheme you need tested before you commit? Tell us about the property and what you intend to build, and we’ll tell you what needs establishing before transfer. Initial consultations carry no obligation.

35 Fricker Road, Illovo, Sandton · Development advisory across the Gauteng City-Region

Property Development Feasibility

Know What the Land Permits Before you Commit

What We Test

Do You Need a Feasibility Study?

Land under offer

An assumption about density

A funder requirement

Bulk services uncertainty

A sectional title scheme

Advice Before the Commitment

Development Feasibility Studies

Due Diligence Investigations

Sectional Title Development

What Due Diligence Covers

Zoning and land use rights

Title deed and servitudes

Spatial policy alignment

Engineering services capacity

Development charges

From Site to Decision

Rights review

Policy alignment

Services and constraints

Development scenarios

Report

Why Schemes Fail

Bulk services capacity

Development charges underestimated

Title conditions that survive rezoning

A scheme contrary to adopted policy

Where We Work

Rezoning Questions

Question not answered here?