Development is a type of business with the goal of generating income from the conversion, development of real estate: the creation, reconstruction or modification of a building or land.
Development concept
"Development" in translation from English - "to develop", "to develop." Key features are the qualitative transformation and increase in the price of construction projects. Development is used as a system to manage the process of creating and developing real estate. Due to this, there is a change in its properties at the physical, economic and legal level.
The physical process of the concept of development - new consumer qualities of the property, corresponding to the needs of society:
- dramatic changes - transformation of the land into an equipped cottage village;
- minor processes - changing the purpose of the land.
Economic levels - increasing the cost of construction due to physical changes. The increase in the price of the object is provided by requests that meet the requirements of the market and its consumers.
Legal process - legal registration of all changes made.
Real Estate Development Tasks
To understand what development is, it is necessary to delve into its main tasks.
- Organization of the process. Discussion and coordination of the future project with state bodies. This implies a professional presentation of the plan and upholding of its parameters, which helps to reduce implementation time and increase the price of the project.
- Work with a contractor. Attraction of reliable investors with minimization of prices and terms of implementation of the plan by contract bidding. Reduced construction time due to use financial leverage to impact on contractors.
- Organization of financing the plan - the formation of an optimal project for the price. It combines various sources of financing: own and borrowed funds of the developer, investments from the outside, increase in capital of securities.
- Effective sales or rental policy. Attracting brokerage companies, increasing the capacity of sales departments: via the Internet and social networks, field sales.
Development Principles
Development is the creation of a professional team of consultants working at different stages of a project. Attracting specialists is one of the principles of the concept.
The development stage of the plan includes the following points:
- initial level - market research, the choice of the location of the object;
- analysis of construction costs;
- analysis of possible risks, methods for their reduction;
- project financing schemes;
- creation and approval of the architectural plan.
The stage of designing real estate includes maintaining contacts with government agencies related to construction, and determining a budget with an error of up to 15%.
Types of Development
The main types of development are distinguished - fee-development (pure) and speculative development (speculative).
Clean development: the definition of the concept includes some of the types of construction activities of the company by the non-owner of the future facility. That is, the company pursues a policy of clean development without the functions of investing and maintaining the constructed structure on the balance sheet.
In this case, the organization carries less risk in the construction of the property.The company carries out design, coordination with government bodies, construction, rental / sale of the building with the customer’s money and receives only a fee from it.
Speculative development - this company builds real estate, is fully responsible for the organization of the project. Contributes own funds to the plan - the core of the future financial scheme.
The concept varies in business strategy:
- orientation to income - getting the most profit from the facility, in the first place is the profitability of the structure during its operation;
- orientation to the cost - the maximum price for the object; the purpose of construction is the mandatory implementation of the construction.
Development by type of plan implementation
What is development by type of project liquidity - four stages of development of the plan stage:
- three levels - project development, signing of the contract and its implementation;
- three stages with sub-phases - the concept of the plan and additions, the contract, implementation and various points;
- four levels - project concept, planning, implementation and completion;
- four stages with additions - preliminary stage, design activity, construction, commissioning.
Real estate development
Types of development are distinguished, depending on the type of real estate.
- Housing fund. Great attention is paid to the construction site, the place of the district in the prestige rating, the location of infrastructure facilities and the transport hub. Marketing is aimed at individuals with a certain level of income.
- Commercial development is a priority when choosing a construction site: a center or quarters in the business part of the city. The environmental factor is receiving less attention. Important: in the immediate vicinity are the main thoroughfares and parking lots. Marketing is focused on legal entities.
- Country estate. The key factor is the close proximity of roads, train stations, metro stations. Great importance is given to convenient access roads to buildings.
The concept of development - making a profit from the sale or rental of real estate. Successful development companies are responsible for any omissions and failures: the organization double-checks and clarifies details. In the event of an error, either on its own or through the fault of another participant in the construction, the developer company must prevent the consequences.
