Everywhere you walk, whether it’s residences, offices, stores, hotels, warehouses, or educational or healthcare institutions, you’re surrounded by real estate. All of these structures are the result of property development. Property developers essentially construct the world around us, shaping and transforming the places in which we live and work.
In this article, we’ll explore what property development is and how it works. As we do, we’ll define exactly what we mean by property development, and uncover what it is that a property developer actually does.
What is property development and how does it work?
Property development, often known as real estate development, is the process of improving the use-value of buildings or land.
It’s a multi-faceted business that can encompass any of the following:
- Buying land and building property on it
- Renovating, expanding, or enhancing a structure
- Property conversion from one use type to another
Who is a property developer
Property developers are business people who work in the real estate industry. What a developer does is based on a basic concept; to put it another way:
A developer adds value to land or property.
A developer can benefit from development by adding value to it. This is one of the primary (but not exclusive) goals of real estate development. The notion of maximizing the value of a property by developing it to its greatest and best use value is central to the property development process.
What are the types of property development?
Any procedure that includes the development of land or buildings in order to make better use of the property is referred to as property development.
The most popular forms of property development include:
- Apartment buildings.
- Single-family residences.
- Commercial buildings like shopping centers.
Who is involved in Property Development?
There are a variety of persons involved in the property development process, each with a unique set of talents and knowledge that contribute to the success of development projects.
Those with a thorough grasp of the regulations that will apply to the development project, as well as how to secure planning permission [link to planning permission guide], construct the actual home, and so on, are examples of such talents.
Developments will bring together an entire team of professionals trained in the several diverse jobs required in effective property development in order to achieve all of this and much more. A project can only function smoothly and successfully if everyone in the development team works together.
Below is a list of the various different individuals most development teams will be made up of:
- A planning consultant
- A quantity surveyor
- An accountant
- A solicitor
- An architect
- An interior designer
- Manager – overseeing the project
While these are all typical people that work on development projects, they aren’t the only professions a project could require. More commercial ventures, for example, may necessitate the hiring of a site finder, an agent, and a marketing department to ensure the project’s success.
The property development process in 7 steps
We’ve set it out plainly, but the development process is much more straightforward. You’ll need to complete your homework, assemble a team of experts, and get a substantial quantity of financing.
- PRE-PURCHASE STAGE
- Put together your team
- Secure finance
- Secure development site
- Understand your risks
- Assess the feasibility
- NEGOTIATING CONTRACTS & PURCHASING
- Hire a buyer’s agent
- Price negotiations
- Draft the contract
- Purchase the property you want
- TOWN PLANNING & DEVELOPMENT APPROVAL
- Consult an urban planner
- Understand the council’s guidelines
- Apply for planning permits
- Obtaining approval for development
- WORKING DRAWING DOCUMENTATION
- Hire an architect
- Consult with the engineers
- Create the development plan
- Obtain approval for design
- PRE-CONSTRUCTION DEVELOPMENT APPROVAL
- Enlist a project manager
- Research & compare builders
- Choose your builder
- Agree on a contract
- WORKING DRAWING DOCUMENTATION
- Plan ahead for unforeseen events
- Site preparation
- Construction management
- Obtain the certification key
- Whether to sell or not to sell
- By selling, you can make quick money
- Transform development into investment
- Earn money
What are the risks?
The last question, out of all of the above, is generally the one that distinguishes those who want to from those who should. Property development may be a dangerous industry, so keep that in mind before jumping in wholeheartedly.
There are a number of things that could work against you, including:
- Changes in interest rates
- Cost increases (parts and labor) in the construction industry
- Legal disputes cost a lot of money
- Changes in the property market or broader economy
- A new set of regulations is coming into effect
- A prolonged period of bad weather halts work
- Making mistakes (It happens! From buying at the wrong price to spending money on renovations that don’t increase the property’s overall value)
Of course, there are techniques to reduce the hazards of property development, but it will never be a completely risk-free endeavour. Even simple renovations require time, and the longer they take, the more likely it is that things will go wrong.
How Can You Maximise The Value of a Property?
- Renovation of the kitchen or bathroom
- You can convert your loft or basement
- Better exteriors or interiors
- The new garden and swimming pool
- Facilities such as a gym and a home cinema
- Aesthetics such as double-glazed windows and doors
- Parking space expansion
- Plumbing and electrical upgrades
- Increasing the house’s energy efficiency
Property development, in general, refers to the conversion of land into commercial or residential structures, such as apartment complexes. It also includes multi-family residences, as well as restaurants, offices, and retail spaces. From start to completion, developers are in charge of the project.