Like every other industry, the commercial property sector is always seeking out efficient ways to increase profitability.
Cost reduction is an essential part of every management strategy – and as the saying goes, ‘time is money’.
Construction time affects building ROI
Once a commercial building project has been finalised and funding secured, developers will always be keen to get construction going as soon as possible.
- The sooner the building is completed, the sooner units can be marketed to prospective buyers and tenants.
- Once revenue from sales and rentals starts to flow into the project, the burden of cash flow management will be eased.
- Cash flow is of great value to developers, since debt repayments on the project’s financing will need to commence ASAP.
While financial and construction costs per square metre can be estimated fairly accurately by a property finance specialist or quantity surveyor, the cost of delays can be trickier to calculate. The potential for project delays will always exist, and the costs involved increase each day the project is overdue.
Knowing how long a construction project will take to get started is essential for developers, agents, and prospective property buyers and tenants.
Red tape causes construction project delays – and it differs across SA cities
Before a construction project can commence, the developer will need to obtain building permission from the local authorities and secure access to electricity.
Delays in these two essential procedures can stall a project for months – before the first brick is even laid.
According to the World Bank’s 2018 Doing Business in South Africa report, which was recently released, municipalities across the country differ vastly when it comes to approving construction projects.
- Cape Town scored extremely well on two of the four criteria measured in the report: dealing with construction permits and getting electricity.
- The other two criteria – registering property and enforcing contracts – are areas where the Mother City needs to increase its efficiency in the coming years.
Cape Town ranks highly – but there’s still room for improvement
With quick approval of construction permits and relatively easy access to electricity, the commercial property sector in Cape Town is well positioned for growth.
On the other hand, the slower pace of property registration and contract enforcement can cause delays long after an office space unit has been sold.
Improvement in these two areas could be the finishing touch that Cape Town needs on its way to becoming a truly world-class commercial property market.
The secret to a perfect property sale: timing is everything
Whether you’re a developer looking to market an exciting new office building, a property investor seeking the best commercial spaces, or a tenant in search of the ideal office space, we’d love to assist you with your property transaction.
Our portfolio of commercial properties in the greater Cape Town region includes some of the city’s most in-demand and innovative office buildings.
If you have any questions about buying or selling commercial property in the Mother City, contact us today, Our team of area specialists in on hand to assist you.