Zoning in on the money
Zoning in on the money

Zoning in on the money

The third in a mini-series on property zoning, development and value

What you’re really interested in is, how zoning impacts the monetary value of your property. 

It’s as simple as this – if you’ve got land that you haven’t fully developed (and a redevelopment is feasible), a developer will pay good money for it.

Your zoning defines what you can and can’t develop:

- The zoning you currently have is outlined in your zoning certificate, and
- The zoning you could get is outlined in the RSDF

Don’t fret if you don’t have the right zoning, you could rezone. 
If there’s demand & the numbers make sense, it’s riskier but potentially yields the best returns.

Let’s do the math:

For a developer, the value of your land is determined by what you can build i.e. your bulk.

To workout bulk, apply your FAR to the land size. 

E.g. 0.5 FAR x 1,000m2 land size = 500m2 of bulk

Then you need to research the current rate developers in your area will pay for bulk. 

Let’s assume a rate of R3K/m2 – R4K/m2. 

Which means the land value lies between R1.5M & R2M.

Right so that’s what your land is currently worth but there’s more to it. 
If your local town council plans to densify your area, you could get a higher FAR by rezoning.

Not so fast – 

1. You can’t necessarily develop all your bulk because:
a) Council restricts building by height, parking, coverage, building lines, and density,
b) A redevelopment may not be feasible due to many reasons incl. logistics or current market conditions.

2. Rezoning takes time – about 12 months (or much longer)

3. And there are substantial costs to consider – town planning fees, council fees, and the cost to upgrade municipal infrastructure to service your land (amongst others).

Stand to make a killing…

Sell your property as is and make some money. 

Develop it to its full zoning potential and make more money (with more risk).

Or completely redevelop your land and make even more money – or not, it’s all in the feasibilities.  

Contact Kat Woolf to crunch the numbers on your property today.


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