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The process of developing buildings or land into a higher use value is a multi-faceted business which can encompass any of the following:
Buying land and building property on it
Renovating, extending or improving property
Converting property from one use type to another
Property developers are the entrepreneurs who carry out real estate development.
There is a simple premise behind what a developer does; put quite simply: A developer adds value to land or property.
Many people will tell you that property development is complex and risky and without the right knowledge, skills or planning it can be and as a result, developers often seek to reduce risk in as many ways as possible.
While profit is often a keen incentive behind property development, there can also be a pertinent social incentive to provide the housing, shops, offices, warehouses, and educational establishments needed to create a robust local community.
Property developers tend to focus either on residential development or commercial development, although there can often be significant overlap between the two.
A distinction in property development is between developers who develop property to sell for capital gain and those who develop to hold property for its long-term rental income.
The choice of strategy depends on the goals of the individual developer and / or investor. Both are perfectly viable strategies but produce different outcomes.
Many seasoned property developers will tell you that they are far (if ever) from knowing all there is to know about property development. However, rather than trying to do it all, most successful developers focus on becoming specialised in a particular type of development. By doing so, they become experts in a particular strategy or niche in the market, maximising their potential for success..
It is important to recognise the many components that may be needed for a successful property development. The process can require a plethora of different skills, professions and competencies.
For most individuals going into property development, it is unlikely they will possess the time or inclination to carry out each stage of the development themselves. In fact, the majority of people who decide to build their own home each year do so through a custom-build route i.e. by hiring a specialist team of professionals to carry out the build for them.
So who do you need on your team to make the property development process as efficient and effective as possible?
A development team will comprise most, if not all, of the following individuals:
A planning consultant: to advise on the planning process and submit any necessary planning application(s);
An architect: to design the development and produce the plans;
A quantity surveyor: to cost the development;
A project manager: to oversee the development;
Contractors: to build the development;
An accountant: to organise the finances;
A solicitor: to transact the initial purchase and final sale of the development.
In addition, if the development is being carried out for profit the team may also include:
A site finder: to identify sites for development;
A marketing team: to produce marketing material for sale of the development;
An agent: to sell the development.
The developer may carry out some of these roles, but will usually act as the coordinator of the entire process, providing the strategic direction and decision-making.
While the developer may not understand the specifics of each profession, he or she should have a high-level understanding of each discipline and the key issues to consider. The developer must ensure that important matters are not overlooked. This will include an understanding of: site finding, planning, valuation, development appraisals, financing, construction methods, agency, marketing, and property law.