June 18, 2024

Unlocking profitable potential with leasehold ownership

3 min read

In a dynamic property development and real estate landscape, the leasehold model has gained prominence for driving flexibility, sustainability and long-term investment opportunities. The recent announcement of a 99-year renewable lease agreement signed by Royal Jozini Private Game Reserve and the King of eSwatini has generated significant buzz within the property industry.

Stefan Botha, director at Rainmaker Marketing, shares his valuable insights into this distinctive property investment model and how it opens doors to profitable opportunities for prospective investors:

Leasehold ownership stands as an innovative approach to real estate, reshaping how we view land and property. Instead of traditional land ownership, leasehold involves the extended leasing of land from a freehold owner. This unique arrangement offers several benefits that make it an attractive choice for developers, investors and communities alike.

1. Cost-efficiency

One of the primary advantages of leasehold ownership is the reduction of upfront costs. Unlike freehold ownership, leasehold arrangements involve a ground or land rental to the owner or leaseholder, which is considerably cheaper than the freehold option. This results in a more accessible entry point into real estate investment, making it an attractive option for those looking to secure an asset without a hefty initial investment.

2. Developer involvement

In a leasehold model, developers and landowners take on an active role throughout the project’s duration. Their vested interest in maximising value for property owners drives proactive involvement. This commitment ensures the project evolves in ways that benefit owners, promoting a sense of community and shared responsibility.

3. Sustainability and community engagement

Leasehold models promote sustainability in various ways. They enforce eco-friendly practices and encourage responsible land use, including green building standards and energy efficiency. Moreover, they necessitate the preservation of natural resources such as forests and wildlife habitats, nurturing biodiversity and ecosystem health. Developers, invested in the long-term success of their projects, collaborate with local stakeholders to enhance community amenities, further enriching the quality of life for residents.

4. Flexibility and adaptability

Leasehold ownership offers flexibility for developers and investors, allowing them to harness valuable land without the need to sell it outright. This flexibility facilitates the allocation of resources toward meaningful community projects and infrastructure development, allowing room for social inclusivity and economic empowerment. It is particularly advantageous for startups, small businesses and entrepreneurial ventures, as it reduces upfront costs, encouraging a diverse commercial ecosystem to flourish within these developments.

5. Long-term investment

Leasehold models are attractive to long-term investors who see potential land value appreciation over time. This stability enhances the resilience of the real estate market and ensures projects maintain their value in the long run, benefiting both investors and the communities they serve.

The future of leasehold ownership holds great promise. Innovations such as blockchain-based land registries and green lease initiatives are poised to transform the landscape. These advancements may pave the way for sustainable urban development, offering a blueprint for others to follow.

Developments like Royal Jozini in Eswatini and even closer to home – Waterfall Estate – represent these sustainable practices, leaving a legacy that will benefit future generations.

Botha believes leasehold ownership provides a contemporary and sustainable alternative to freehold, delivering a range of benefits that contribute to responsible land development, community engagement and long-term value. As we look ahead, leasehold models are shaping the future of real estate in exciting and eco-conscious ways.

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