Property development (also real estate development) is the process of developing buildings for owner occupation, lease or sale. Property development can be initiated by property developer who is driven by profit directly, by government or local authority which goal is to meet some political objectives or finally by non-profit organisation wanted to provide affordable housing for people in needs or other charity goals.
While the process may be different for different kind of property development situations, basically all property development projects must experience the following stages:
Choosing location for the property, developer wants to build
Choosing location for the property is first step in the development process. Basically, choosing location, can vary by the type of the property, the sector which property developer operate in and many others factors. By property location we mean macro-location which is country, region or city.
Identification of the building plot and taking a survey on it
Once developer choose property location, he can start looking for best available site for the investment. Choosing a site is a complex task which includes investigation of all legal aspects concerning the land like ownership, planning permissions or support availability. Developer needs also to investigate the physical ground by checking drainage or load-bearing capacity. All services like electricity, water or gas should also be surveyed.
Providing an outline planning scheme (OPS)
A planning scheme is a legal document which regulates utilization, protection and development of the site in the specific region. A planning scheme controls the utilisation and development of land through planning provisions to accomplish those policies and approaches. It includes maps, written requirements of a scheme (an ordinance) and incorporated documents.
Estimating the value of the plot
Once all the legal and investigation work is done, the developer should make an estimation of the land he want to acquire. This is a fundamental issue before starting next step which is negotiation. This activity is mostly provided by a certified professional.
Negotiating for the land acquisition
When the site appraisal is done, the next step in the process comes in, which is negotiation. Negotiating good price for the land is crucial for the whole investment and it's ROI.
Design and planning
Like every project, property development need to be planned thoroughly. Work need to be scheduled, time estimated and all the costs known.
The developer, unless having internal financial resources, need also secure appropriate finance for the entire property development project.
Formal plot acquisition
After site surveying, all the investigation process, appraisal and finally negotiation, legal acquisition of ownership of the land should be taken by property developer.
Once all the raw resources of the development process are provided like land, legal work, materials etc. construction phase can be started. Throughout this stage the property development process is to make sure that the development is completed on time and within the without sacrifising quality of the investment. It's the most challenging part of the process and this step
Marketing and sales activities
This step is finalizing entire process. Property development driven directly by developer's profit need to be marketed to potential customers and then lease or sale while maximizing return on investment.
Despite of the fact that there are some particular steps that each real estate developer need to follow with the end goal to accomplish the most ideal result, the process isn't quite linear.
- Grimes A., Mitchell I. (2011) , Impacts of Planning Rules, Regulations, Uncertainty and Delay on Residential Property Development. Motu Working Paper 15-02 Motu Economic and Public Policy Research.
- Isaac D., O'Leary J., Daley M. (2015) , Property Development: Appraisal and Finance 2nd edition. Palgrave Macmillan.
- Kauko T. (2013) , On Sustainable Property Development – The Case of Budapest. Oxford Brookes University.
- Staub T. (2011) , Valuation of the Swedish direct investment territorial allocation in the context of Latvian commercial property development. Riga Technical University.
- ↑ D. Isaac, J. O'Leary, M. Daley (2015).
Author: Paulina Baczyńska