A boom in land development is observed in South Africa, and investors, developers, institutions, and private buyers are striving to acquire vacant plots at current prices to secure future opportunities.
The Significance of Development Land
According to Greg Dart, director of The High Street Auction Co., well-located land is becoming extremely sought after. He notes that development land is one of the few asset types where value is created, rather than simply acquired. These plots represent a pure opportunity for forming new industrial parks, logistics centers, residential complexes, mixed-use zones, or commercial properties.
Greg Dart emphasizes: 'The most significant projects start with the right piece of land. The largest land deals start in the right market. An auction combines both these elements—it connects vision with possibility and turns potential into realized value.'
Infrastructure Development Initiatives
Meanwhile, Tuesday saw an announcement from the Development Bank of Southern Africa (DBSA). The bank reported that through support for the Free State University student accommodation program, 520 student places were provided in Bloemfontein and Qwaqwa with investments totaling 119.6 million rand. This initiative has contributed to expanding access to higher education and creating a favorable learning environment.
DBSA indicated that the positive impact extends beyond mere infrastructure: students save an average of 534 rand monthly on transport costs and recover about 8 hours and 40 minutes that would otherwise be spent commuting. Furthermore, safe, purpose-built housing contributes to improved academic performance, well-being, and overall student success. DBSA representatives stated: 'At DBSA, we invest in infrastructure that creates opportunities because Africa's prosperity starts with investing in people.'
Reasons for High Bids on Vacant Plots
In parallel, WMPB Land Surveyors published a post on LinkedIn on Wednesday explaining that municipalities often set higher rates on vacant plots due to a combination of financial, planning, and political reasons. Although the approach varies by municipality, the main motives include:
- Stimulating development: Higher rates discourage owners from leaving serviced plots empty for long periods, as municipalities are interested in developing land for housing, business, or other productive uses that support economic growth.
- Recouping infrastructure costs: Even if a plot remains vacant, the municipality may have already provided roads, water, sewage, stormwater, and electrical infrastructure, the maintenance of which helps cover costs through rates.
- Reducing land speculation: High rates encourage owners to either develop the land or sell it to someone willing to do so, instead of holding it for years awaiting value appreciation.
- Promoting efficient land use: Inaction on serviced urban plots can lead to urban sprawl, so encouraging infill development ensures better use of existing infrastructure.
- Municipal revenue: Property rates are an important source of income for municipalities, used to fund services such as roads, parks, libraries, waste collection, and public safety.
According to WMPB Land Surveyors, in South Africa, the Municipal Rates Act 2004 (Act 6 of 2004) grants municipalities the right to establish various categories of rates (e.g., residential, commercial, agricultural, vacant) and charge different rates for each category while adhering to their Rates Policy and the Act. This allows municipalities to legally charge a higher fee for vacant land compared to developed land, provided it is justified in the adopted policy.
Owners' Rights to Contest Rates
The consulting firm added that owners have the right to contest increased rates on vacant plots if they believe their property has been misclassified or the rate is unjustified. To do this, they can review the municipality's annual Policy and Tariffs, check the property category in the municipal valuation roll, and lodge an objection during the roll objection period or appeal, if permitted.