Financing Leasehold Developments in South Africa: What Landowners, Investors and Developers Need to Know

By Warren Brusse, Chief Financial Executive, Zebinvest Real Estate Development

Zebinvest believes that leasehold is not a compromise - it’s a strategic innovation that enables inclusive growth, enhances land utilisation, and attracts capital in a sustainable way.

Leasehold real estate development is fast becoming a powerful tool for unlocking land potential in South Africa - particularly in high-demand urban and peri-urban areas. While the concept of leasehold has traditionally been viewed with some caution in the finance world, recent legal and financial frameworks have created an enabling environment where banks and financial institutions now see security and stability in leasehold developments. For landowners, investors, and developers, this is a game-changer.

Understanding the Leasehold Structure

A leasehold development model typically involves a landowner granting a long-term lease, often 99 years, to a developer, who then builds commercial, retail, industrial or residential infrastructure on the land. The lease agreement is not merely a contract - it is a real right that is registered in the Deeds Office and carries legal weight similar to ownership in many respects.

This structure allows landowners to retain long-term control over their asset while unlocking value through rental income, capital appreciation, and shared upside in development. For investors and developers, it lowers upfront land acquisition costs and reduces risk by sharing the long-term commitment with the landowner.

Why Financial Institutions Are on Board

Historically, there was some hesitancy from banks and financiers to fund leasehold developments due to perceived complexities in ownership rights and security. However, this landscape has evolved dramatically over the past 20 years.

Today, financial institutions are increasingly comfortable financing both commercial development loans and end-user retail loans within leasehold frameworks. The key reason: security through registration.

• Development Financing: Commercial lenders now view the underlying development lease - when properly structured and registered in the Deeds Office, as sufficient collateral for financing. The long-term lease creates a legally enforceable and transferable real right, giving banks assurance over tenure and future income streams.

  
  

• End-User Financing: Retail financiers are similarly supportive when it comes to the underlying end-user lease (for example, in the case of sectional title units or stand-alone freehold title homes). As long as the lease is also registered, banks see it as adequate security for home loans or business premises financing.

  
  

This dual confidence from lenders is opening the door to robust leasehold development activity, especially in areas where outright land sales may not be feasible due to communal ownership, restitution claims, or public ownership models.

A Legal Perspective

John Webber, Director of Real Estate at Cliffe Dekker Hofmeyr, underscores the importance of proper structuring:

“When development leases and end-user leases are drafted and registered correctly, they create enforceable, tradable real rights that give comfort to financiers. The Deeds Office registration is what underpins the legal security and from that flows the bankability of leasehold developments.”

Webber's insight highlights the importance of engaging skilled legal and financial advisors from the outset. At Zebinvest, we work hand-in-hand with our professional teams to ensure every lease agreement and registration is watertight, compliant, and finance-ready.

What This Means for Stakeholders

• Landowners: You don’t need to sell your land to unlock its value. With the right development partner, you can retain long-term ownership while deriving substantial income and growth through a secure leasehold arrangement that attracts bank finance.

  
  

• Investors: Leasehold developments are now a viable, financeable investment class. You can benefit from reduced land acquisition costs while still accessing growth upside, rental yields, and capital returns.

  
  

• Developers: With lenders on board, leasehold development no longer carries a financial disadvantage. In fact, it may enable quicker project starts and greater capital efficiency - particularly in high-potential but historically underutilised areas.

  
  

Building Confidence, Unlocking Potential

At Zebinvest Real Estate Development, we specialise in structuring, funding and delivering leasehold developments across the Western Cape in South Africa. We believe that leasehold is not a compromise - it’s a strategic innovation that enables inclusive growth, enhances land utilisation, and attracts capital in a sustainable way.

As financial institutions continue to back well-structured leasehold developments, now is the time for landowners, investors, and developers to confidently embrace this model and be part of reshaping South Africa’s property future.

Interested in partnering with Zebinvest? If you're a landowner wanting to unlock value or an investor seeking long-term returns in a secured leasehold model, contact our team today to explore the opportunities.

Let’s finance the future, together.

Warren Brusse, Chief Executive Officer, Zebinvest Real Estate Development