Do your homework when buying a stand
Dec 03 2008 03:57:20:143PM  - (SA)  

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“It is particularly difficult to find vacant freehold plots in built-up residential areas,” says Bester. The majority of open stands in the suburbs are vacant because they are either too small to build on, or they cannot be developed for some reason such as the proximity of overhead electricity cables or underground infrastructure.”

So driving around looking for the right spot might be a waste of time. A far more practical option, he says, is to consider buying a stand in a planned development. However, these stands come with a variety of rules, such as building within a specified time limit and according to stipulated designs.

“Holiday homes are a different matter,” says Bester. “Vacant stands in known leisure areas are generally more open to being sold without restrictions, but they are also usually more expensive.”

Bester cites the cost of coastal stands as an example, and says it is particularly true for sea view and beachfront stands. Analysts say that prices of vacant coastal land continue to rise at a rapid pace as land suitable for development with good beach access and views becomes increasingly scarce.

“Today, buyers will battle to find a beachfront stand anywhere on South Africa’s coastline for less than R1 million, with prices of prime sites ranging between R1 000 and R4 000/m²,” he says. “Land prices, particularly in coastal areas, are now outpacing house prices. A vacant stand of 7 000 m² on Plettenberg Bay’s Robberg Beach was sold in November 2007 for R25 million to a South African buyer, the highest price ever achieved for a beachfront property on the Southern Cape coast.” And like every other facet of the property market, vacant land sales are down. FNB property strategist John Loos says new loans for the purchase of vacant land fell by 31,5% in the third quarter of 2007, and the downward trend appears to be continuing.

In spite of this, says Bester, “unfettered” vacant land is still considered an excellent investment option, and property investors remain interested. “In the long term,” he says “land is a valuable commodity because of its increasing scarcity.”

Bester’s advice to potential buyers is to do extensive research before making an offer on a vacant stand. “Land on the outskirts of developing towns may be a good future growth option but the buyer needs to determine whether the area is zoned for commercial, industrial or residential use,” he says. “Buying a plot for a dream home in an area planned for factory use will be a costly mistake.”

The buyer also needs to find out if there are mineral rights or land claims on the land, and whether property tax will be payable.

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