Builders Jamaica December - March 2022

CONSTRUCTION & CONTRACTORS
Tackling the Invisible Costs of
a Development
38
Ignoranceisn’t always bliss, especially when it comes to
property development. While real estate development can
be an excellent way to build wealth, things can make a turn
for the worse if you aren’t equipped with the right information.
Developing a property is a serious commitment, and
unfortunately, some property developers end up with
a lot of debt as they didn’t do their due diligence when
starting out. Perhaps they were prepared to handle obvious
expenses such as furnishings, maintenance, and repairs,
but what about the unforeseen costs? Don’t let the same
fate befall you if you’re new to real estate development.
Learn more about some of the hidden costs associated with
property development as well as the costly mistakes below:
Utility Connection Fees
Unfortunately, electricity and water installation is
an afterthought for some new developers. Without
these and other utilities, you won’t get very far
with your development. You’ll have to pay for the
connection fees even before breaking ground.
Shardon Haye, Chartered Quantity Surveyor and
Managing Director at CPM Consultants Ltd. points out
that while other developers may be aware of this, they
may make the assumption that they won’t have to concern
themselves with utility connections if they’re working
in an existing residential community that already has
power and water supply. He explained, “For example,
some developers who plan to build townhouses may
purchase a lot in an existing residential community with
strictly single-unit homes, not realizing that the existing
power and water supply is insufficient for townhouses.”
He continued, “An inexperienced developer may not
know that the existing residential community only
has a one or two-inch water line which is too small for
townhouse developments. This becomes a greater
problem if they’re considering a commercial structure
such as an office building as the demand for drinking
and running water and fire safety measures is significantly
increased. They’ll now have to ask the National Water
Commission to upgrade to a larger capacity line- a request
that can’t be fulfilled unless the developer upgrades
the infrastructure downstream while NWC will upgrade
their pumps and line. This will attract an impact fee.”
Haye added that similarly, the Jamaica Public Service (JPS)
will have to install a transformer to meet the demands