By Wynand Tromp, Tromp Studio
The property game is a tricky business. A tricky business even in a flourishing economy. The question is, what happens if the economy is not flourishing?
When an economy is in distress, the property industry is one of the first to be severely affected by this. The well-being of the property industry is directly related to the well-being of the economy. There might be people who think a struggling property industry does not affect them because they are not working in the property industry, but they could not be more wrong.
Any person that has a roof over their head, will at some point suffer the consequence of a struggling building industry. Whether you are a property owner, a business owner, an employee, or a tenant; when the building industry takes a nosedive, so do you. If you take into consideration the ripple effect that this has on a country, every single person is affected.
We’ve all heard the phrase, “it’s a buyers’ market”. In recent times, this has been said by everyone in the know, but what does this mean?
It means that the current economic situation is forcing people to drop their prices. It means that if you own property, now is not the time to sell it. It means that if you own property, it’s best you hold onto it until the market turns. Sometimes this might be a possibility, but often people sell their properties because they must, not because they want to; especially when the economy is fighting for air. If you are in the market to buy property, this is great news, but what do we do if we are trying to sell a property in a buyer’s market? Sadly, you will be forced to drop your asking price, sometimes leading to significant financial losses. Losses that you certainly do not want to realize.
In most instances, property is the biggest asset you will ever attain, and you spend a lifetime paying off bonds. Even if the property is tenanted, costs such as levies, taxes, and maintenance will always come into play. To lose money on such an investment by dropping your asking price, could have dire consequences and is often not possible. The aim is to maximize your return on investment, and to do so, you need to sell the property for as much as you possibly can. In a buyer’s market, this is not always possible.
The redevelopment option
However, there is an alternative. If you are a property owner, what you need to do is to check what the zoning classification of your property is. If it is zoned for redevelopment, you are in luck. It means that you are sitting on a potential goldmine, and by partnering with a developer, you could not only get your asking price, but potentially be a shareholder in a lucrative property development venture.
Property developers are always looking for opportunities, and the property that you might be trying to sell, could be exactly what they are looking for.
How would I know whether my property has development potential?
If you are selling a property in an area where you have seen developments popping up, chances are that your property has been demarcated for redevelopment.
The first thing you should do, as mentioned above, is to confirm the property’s zoning classification. One of the ways in which you can do this is by accessing your local municipality’s online zoning viewer. This platform has a city map, indicating the zoning of all properties.
A rezoning process can be undertaken should you find that your property is not demarcated for redevelopment, but fortunately, you don’t have to concern yourself too much about this process, as there are professional town planners that deal with such matters.
Calling the professionals
The most important step for you to take is to get an architect involved.
An architect should be able to advise you on the development potential of your property and could introduce you to developers and town planners to manage the process for you. Often the architect will facilitate the entire process on your behalf.
Another aspect to take note of, is that if you were to list your property with a broker to sell, mention to them that you are willing to negotiate with developers about a joint venture. It is vital that your broker knows that you are willing to make your property available for development. In turn, you should be offered shares in the development. All you have to do is sit back and allow the professionals to work with your property.
It might be a “buyer’s market”, but by thinking strategically and partnering with the right people, you have the opportunity to make even more than the asking price by investing your investment.