Property Correspondent

IN ONE of the most expensive land sales yet recorded in Johannesburg, a developer acquired about 2,83ha of land in the Sandton central business district for more than R140m. The sale, which was brokered by Firzt Realty Company, also included the individual purchase of 50 sectional title residential units situated on the land.

Denese Zaslansky, CEO of Firzt Realty Company, said yesterday she did not want to disclose the name of the developer or the site’s locality until the developer formally launched the planned new development on the site.

Zaslansky said the developer planned a mixed-use development including retail, office and residential components. She said it was definitely one of the most expensive land sales in Johannesburg, but the price included the 50 residential units that had to be bought individually from owners.

Zaslansky said that about two years ago, her estate agency sold a 1,42ha piece of land in Hyde Park for R25m. But in the latest transaction, land fetched roughly R25m for 0,404ha (an acre).

She said the deal was finalised in November, and the developer was waiting for the rezoning of the land for mixed-use development. The new development is expected to be brought to the market within 12-18 months.

Zaslansky said there was a “frenzy among developers to obtain rezoned land for development purposes”. Firzt has been inundated with calls from developers asking the agency to source rezoned land for them.

“We just listed a property in Parktown North, which has not been zoned yet. Council has indicated it would support 18 residential units. On the first day of listing we had three offers from serious developers,” said Zaslansky.

There was a shortage of developable land with services in Johannesburg, she said. “If you look at the nodes where there is electricity, there is virtually no land available. “The client will buy a piece of land with a house or houses on and demolish the houses. Then the client applies for rezoning and does a development on a whole piece of land,” she said.

Zaslansky said there was land available between the Midrand and Centurion areas, but the city council “would not commit to when the services will be available”. Property economist Francois Viruly, of Viruly Consulting, said that instead of looking for “greenfield” developments, developers would increasingly turn to “brownfield” developments, which includes land that has already been developed in one form or another.

“One of the important issues around this is that it certainly simplifies environmental issues, which can severely impact on timing issues for developers, with a risk of them missing the property cycle,” said Viruly.

Brownfield developments would make it quicker for developers to ensure that they did not miss the relevant property cycle. “Land scarcity starts ensuring that land is used optimally,” he said. Viruly said that, generally, land prices in the last year had risen. He said that at the moment it was not uncommon to see the land price making up more than 20% of the development cost.

Development costs and land values were both rising. “What is also starting to happen is that land in the Johannesburg area is beginning to become scarce. That scarcity of land will ultimately push up building costs and for the tenant it will translate into higher rentals.”