Land Development Is Critical To Tourism Growth

Feb. 15, 2018, 9:43 a.m.

NRA asset, but are the responsibility of the devel­oper to build.

The same thing usually applies to Fiji Electricity Authority reticula­tion within the development.

FEA will take control of the re­ticulation immediately and charge owners for the power they use and will return the construction cost to the developer after a period of seven years,

Another area of concern and ris­ing cost is the need to use a num­ber of different contractors to complete the development.

The civil engineering for a land development is usually a very sig­nificant part of the total cost and in many cases exceeds the initial purchase price of the land.

In almost every case the develop­er will need to appoint a number of different contractors who own and operate the heavy equipment that is used to fill and reshape the land.

A sudden, large upturn in activ­ity in land development will cause an increase in the rates charged by contractors for their work.

This is further exacerbated by the increased demand for fill ma­terial and the increase in labour cost because of the demand for more workers as the total number of developments increases.

Risks in commercial funding

Almost every development in Fiji is financed by commercial funding and this is another area where the developer is at risk.

Funding is becoming expensive as demand from developers in­creases, the funding providers are becoming very risk averse against a possible over supply in the mar­ket and impose very rigid condi­tions, including rigid timelines.

Because of these issues, particu­larly the interest component of the financing, it is important to the developers bottom line that the development is completed to dead­line (and if at all possible before deadline) to keep the financing costs as low as possible.

There is constant pressure on the developer, and through to the con­tractors, to continue to perform against tight deadlines.

Delays in the provision of man­datory approvals and delivery of material on site can causes a run-on effect and delays in completion, so developers must be constantly on guard to minimise impact de­lays could have.

Not for amateurs

Land development is not (as it was often in the past) an area where amateurs can play around in their spare time and end up with a reasonable profit.

It is also certainly not an area for the faint hearted to consider because, while the rewards for the successful operators can be at­tractive, the potential for losses is always just a moment of careless­ness away.

But it is equally sure that if Fiji is to continue to grow the tourism industry and the overall economy it can only do so on the backs of the developers.

It is for this reason that Govern­ment is committed to assisting those who are prepared to get stuck into the land development business and open up new land and new resources.

Some time ago the A-G floated a concept to closely link the approv­ing departments and monitor de­livery.

This was a worthwhile idea and would help the main issue devel­opers face.

Development activity must in­crease now if the future of tour­ism growth is to be ensured.

This article was authored by John Ross and originally published in the Fiji Sun on February 10, 2018.