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Real estate development, or property development, is a business process, encompassing activities that range from the renovation and re-

lease A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...

of existing buildings to the purchase of raw

land Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the planet Earth that is not submerged by the ocean or other bodies of water. It makes up 29% of Earth's surface and includes the continents and various isla ...

and the sale of developed land or parcels to others. Real estate developers are the people and companies who coordinate all of these activities, converting ideas from paper to real

property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...

. Real estate development is different from

construction Construction is a general term meaning the art and science to form Physical object, objects, systems, or organizations,"Construction" def. 1.a. 1.b. and 1.c. ''Oxford English Dictionary'' Second Edition on CD-ROM (v. 4.0) Oxford University Pr ...

or housebuilding, although many developers also manage the construction process or engage in housebuilding. Developers buy land, finance real estate deals, build or have builders build projects, develop projects in joint venture, create, imagine, control, and orchestrate the process of development from the beginning to end.New York Times, March 16, 1963, "Personality Boom is Loud for Louis Lesser" Developers usually take the greatest risk in the creation or renovation of real estate and receive the greatest rewards. Typically, developers purchase a tract of land, determine the marketing of the property, develop the building program and design, obtain the necessary public approval and financing, build the structures, and rent out, manage, and ultimately sell it. Sometimes property developers will only undertake part of the process. For example, some developers source a property and get the plans and permits approved before selling the property with the plans and permits to a builder at a premium price. Alternatively, a developer that is also a builder may purchase a property with the plans and permits in place so that they do not have the risk of failing to obtain planning approval and can start construction on the development immediately. Developers work with many different counterparts along each step of this process, including architects, city planners, engineers, surveyors, inspectors, contractors, lawyers, leasing agents, etc. In the

Town and Country Planning Town and country planning in the United Kingdom is the part of English land law which concerns land use planning. Its goal is to ensure sustainable economic development and a better environment. Each country of the United Kingdom has its own ...

context in the United Kingdom, 'development' is defined in the Town and Country Planning Act 1990 s55.

History

Credentials

Many aspects of the real estate development process require local or state licensing, such as acting as a real estate broker or sales agent. A real estate developer is not a professional designation; there are no schools or associations who recognize or protect the term as a trademark.

Paths for entering the development field

No single path automatically leads to success in real estate development. Developers come from a variety of disciplines— construction, urban planning, lending, architecture, law and accounting, among others. Recent specialized programs that award a Master of Real Estate Development (MRED) degree are also available. The graduate programs in real estate development are the most comprehensive education in the real estate industry. Other formal education includes a Master of Science in Real Estate (MSRE), or an

MBA A Master of Business Administration (MBA; also Master's in Business Administration) is a postgraduate degree focused on business administration. The core courses in an MBA program cover various areas of business administration such as accounti ...

Organizing for development

A development team can be put together in one of several ways. At one extreme, a large company might include many services, from

architecture Architecture is the art and technique of designing and building, as distinguished from the skills associated with construction. It is both the process and the product of sketching, conceiving, planning, designing, and constructing building ...

engineering Engineering is the use of scientific principles to design and build machines, structures, and other items, including bridges, tunnels, roads, vehicles, and buildings. The discipline of engineering encompasses a broad range of more speciali ...

. At the other end of the spectrum, a development company might consist of one principal and a few staff who hire or contract with other companies and professionals for each service as needed. Assembling a team of professionals to address the environmental, economic, private, physical and political issues inherent in a complex development project is critical. A developer's success depends on the ability to coordinate and lead the completion of a series of interrelated activities efficiently and at the appropriate time. Development process requires skills of many professionals: architects, landscape architects, civil engineers and site planners to address project design; market consultants to determine demand and a project's economics; attorneys to handle agreements and government approvals; environmental consultants and soils engineers to analyze a site's physical limitations and environmental impacts; surveyors and title companies to provide legal descriptions of a property; and lenders to provide financing. The general contractor of the project hires

subcontractor A subcontractor is an individual or (in many cases) a business that signs a contract to perform part or all of the obligations of another's contract. Put simply the role of a subcontractor is to execute the job they are hired by the contractor f ...

s to put the

architectural plan In architecture and building engineering, a floor plan is a technical drawing to scale, showing a view from above, of the relationships between rooms, spaces, traffic patterns, and other physical features at one level of a structure. Dimensio ...

s into action.

Land development

Purchasing unused land for a potential development is sometimes called

speculative Speculative may refer to: In arts and entertainment *Speculative art (disambiguation) *Speculative fiction, which includes elements created out of human imagination, such as the science fiction and fantasy genres **Speculative Fiction Group, a Per ...

development. Subdivision of land is the principal mechanism by which communities are developed. Technically, subdivision describes the legal and physical steps a developer must take to convert raw land into developed land. Subdivision is a vital part of a community's growth, determining its appearance, the mix of its

land use Land use involves the management and modification of natural environment or wilderness into built environment such as settlements and semi-natural habitats such as arable fields, pastures, and managed woods. Land use by humans has a long ...

s, and its infrastructure, including roads,

drainage Drainage is the natural or artificial removal of a surface's water and sub-surface water from an area with excess of water. The internal drainage of most agricultural soils is good enough to prevent severe waterlogging (anaerobic condition ...

systems,

water Water (chemical formula ) is an Inorganic compound, inorganic, transparent, tasteless, odorless, and Color of water, nearly colorless chemical substance, which is the main constituent of Earth's hydrosphere and the fluids of all known living ...

, sewerage, and public utilities. Land development can pose the most risk, but can also be the most

profitable In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs. It i ...

technique as it is dependent on the public sector for approvals and infrastructure and because it involves a long investment period with no positive cash flow. After subdivision is complete, the developer usually markets the land to a home builder or other end user, for such uses as a

warehouse A warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parks on the outskirts of cities ...

or shopping center. In any case, use of spatial intelligence tools mitigate the risk of these developers by modeling the population trends and demographic make-up of the sort of customers a home builder or retailer would like to have surrounding their new development. Saturday, April 18, 2020

References