South Africa’s land development boom: Why investors are securing vacant sites now

Well-located development land has become increasingly sought after by developers, land bankers, institutions and private investors looking to secure tomorrow's opportunities at today's prices. 

As South Africa's cities expand and infrastructure investment continues to reshape growth corridors, says Greg Dart, the director at The High Street Auction Co. 

He says development land is one of the few asset classes where value is created-not simply acquired. It represents opportunity in its purest form: the ability to shape the next industrial park, logistics hub, residential estate, mixed-use precinct or retail destination. 

“The greatest developments begin with the right piece of land. The greatest land transactions begin with the right marketplace. Auction brings both together-connecting vision with opportunity and transforming potential into realised value.” 

On Tuesday, the Development Bank of Southern Africa (DBSA) said when students have safe, quality accommodation close to campus, they gain more than a place to stay; they gain time to study, peace of mind and a stronger opportunity to succeed. 

The SA government-owned development finance institution said it DBSA-supported University of the Free State Student Residence Programme, which delivered 520 student beds across Bloemfontein and Qwaqwa through a R119.6 million investment, thereby helping expand access to higher education and creating an environment where students can thrive. 

It said the impact goes beyond infrastructure:

• Students save an average of R534 in travel costs every month. 
• They reclaim approximately 8 hours and 40 minutes monthly that would otherwise be spent travelling. 
• Safe, purpose-built accommodation contributes to improved academic performance, wellbeing and student success.

“At DBSA, we invest in infrastructure that unlocks opportunity because building Africa's prosperity begins with investing in people.” 

Municipalities often charge higher property rates on vacant land

Meanwhile, WMPB Land Surveyors wrote in a LinkedIn post on Wednesday that municipalities often charge higher property rates on vacant land because of a combination of financial, planning, and policy reasons.

The property development consultancy says that while the exact approach varies by municipality, the main reasons are: 

1. To encourage development

• Higher rates discourage owners from leaving serviced land vacant for long periods.
• Municipalities want land to be developed into homes, businesses, or other productive uses that support economic growth. 

2. To recover infrastructure costs

• Even if a property is vacant, the municipality may already have provided roads, water, sewer, stormwater and electrical infrastructure to serve it. Property rates help recover the cost of maintaining this infrastructure.

3. To reduce land speculation

• Some owners buy land and hold it for years while waiting for its value to increase. Higher rates encourage owners to either develop the land or sell it to someone who will.

4. To promote efficient land use

• Vacant land within urban areas can contribute to urban sprawl if serviced land remains unused while development spreads outward. Encouraging infill development makes better use of existing infrastructure.

5. Municipal revenue

• Property rates are a major source of municipal income used to fund services such as roads, parks, libraries, refuse removal, and public safety.

According to WMPB Land Surveyors, in SA, the Municipal Property Rates Act, 2004 (Act 6 of 2004 allows municipalities to:

• Set different property rate categories (e.g. residential, business, agricultural, vacant land)
• Levy different rates for different categories, provided they comply with their Rates Policy and the Act.
• Offer rebates or exemptions in certain circumstances.

The consultancy says this means many municipalities lawfully charge a higher rate for vacant land than for developed properties, provided this is justified in their adopted rates policy.

Owners can challenge higher vacant land rates

It adds that owners can challenge higher vacant land rates if they believe you believe their property has been incorrectly categorised or the rate is unreasonable. 

They can:

• Check the municipality's annual Rates Policy and Tariffs
• Verify the property's category on the municipal valuation roll, 
• Object during the valuation roll objection period or appeal where permitted.