Why Perform Due Diligence Before You Commence with Property Development?

With any property development, the purchase of land with the intention of developing it or for improvement on a development property, you need to perform due diligence checks. This is important before you buy, propose, or start with property development.

The Purpose of the Checks

The due diligence helps you to plan costs, assess the viability of the particular piece of land for the purpose you intend to use it for, and prevent the discovery of unforeseen hazards or limitations later on in the development process.

For instance, have you looked at what the land was used for in the past? If not, you may end up building a residential estate on an old graveyard. It may not seem like a problem, but if that graveyard belongs to a community who intends to initiate a land claim on the property because of the graves of their ancestors, you may end up losing the property after all the development costs have already been paid.

What Can You Discover?

Think of issues such as underground utilities that can hinder your ability to erect buildings on the property. What if the site is polluted with a chemical that can cause health problems for occupants of the particular development? Have you considered the potential flood risk or the possibility of a landslide? What if you want to develop a new fuel station on the land, but later find out that the property you bought cannot be used because of protected species that live on or near the property?

Why You Need Professional Assistance

Due diligence is therefore essential before you buy property for development or commence with the development and permit applications. Trying to conduct the research and due diligence without professional assistance is a waste of your time and money.

Unless you have the same land use management knowledge as town planners, and access to maps and zoning regulations, and surveys, you are likely to miss important factors. Indeed, when you make use of our urban and town planning team, we work with other professionals, such as land surveyors, architects, engineers, property experts, local authorities, environmental experts, and architects, in order to find relevant information. We put it all together in a clear and concise due diligence report that includes a checklist.

Essential Checks

Issues that must be checked could include everything from land use constraints to flood risks, land claims, right of way, and ground stability, to name only a few. The type of development you have in mind is also important. A parcel of land can be well suited for the development of a residential estate, but not for an industrial plant. Likewise, it can be suited for a motor racetrack, but not a private cemetery.

The due diligence helps you to:

• Establish whether you can build what you intend to on the particular piece of land to make the profit you have in mind.

• Calculate the costs associated with the development of the land, including the stormwater drainage and sewage systems needed.

• Identify potential project delays to plan for timeframes and thus costs associated with the various phases of development.

• Understand the details and hidden aspects of the land that you want to buy or develop.

• Manage risks better because you have the information beforehand to plan for such risks.

Other Important Checks

Apart from the already mentioned checks forming part of the due diligence process, we conduct a check regarding legal issues. This entails a review of all aspects to do with the parcel of land that can have a legal impact on the development.

We perform checks to determine site restrictions, such as overhead cables that can be problematic or perhaps old mine tunnels that can make it difficult to erect a three-storey vehicle parking lot. We contact the utility service providers, look at plans regarding services across the site, and review the history of the site. Factors that can restrict the design or add to the cost of the development can thus be identified in time.

We also assess whether the zoning of the particular area allows for the type of development you have in mind. Various surveys must be performed and we can help.

Call on the professionals to assist you with due diligence to ensure that your property development plans can be realised on the land you have in mind. Get in touch with our team for more information on our property development due diligence services.