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The Real Estate Development Process

Name-Binod
Kumar
1.
a) Marketing of property is like selling an idea, as idea is the beginning of development
of property and vision is the target where one wants to reach after the development. In
marketing of property final development “vision” is used for selling the property.

b) Vision is used by developer as guiding target to achieve, planning of the development


revolve around the vision .before construction starts vision is used for planning.

c) Vision is important for any developer as it defines the target to achieved, closer in
developing the property to vision more successful is the developer

d) Developer makes his or him vision tangible with the help of “Plan”. Plan consists of
following:
Design: Planning of use of the physical property
Cost Analysis: cost analysis of the development process
Marketing: Planning of marketing of property.
Revenue Analysis: Analysis of expected revenue from the property.
Before start of planning following steps are required for study phase:
• Evaluation of the site
• Preliminary market study
• Preliminary budget
• Preliminary financial analysis
• Time analysis
• Feasibility analysis.
Reports and documentation are used by developer for making vision into tangible.

2. The functional activity that is pervasive throughout the development process is:
• Market /program Planning
• Leasing
• Financial
• Community Approval
• Documentation
• Action

Any development process is targeted for its five components


• End user
• Community
• Government
• Investor
• You
Any changes in requirement of any target component may enforce to change in the
development process.
If government changes policy which is not suitable for the project, it will force to change
the project.
If investor feels project is not providing as per expectation, it will force to change the cost
analysis to align with investor expectation.

3.
a) Enterprise Concept for Real Estate development means that Real Estate development
should be seen as business entity in which one has to actively work to increase its value.
It requires active management of property, following the trend in the market, tracking the
change in the requirement of the end user and aligns with government policy
requirement.
b) Enterprise concept is used by developer for actively managing the property .This
makes a developer to look for the negative in the existing scenario and come out with
innovative solution for them .Looking for the risk and trying to reduce them .Tracking the
government policy and shifting the plans according to them.

4.
a) Entitlement is the right to develops land with approval of
• Securing local and political approval
• Societal marketing
• Community
• End user
b) Entitlement is most important factor in development process as it is directly going to
effect the approval; these are the component on which the development process depends
upon. Right from beginning of the development process that is from planning, approval is
required, one has to fulfill the guidelines decided by the government and local body, one
has to get the approval from the people who are staying in the community as they don’t
oppose the development process, one has to get approval from end user as they are the
person who will be using it

5. The historical event which had major effect on real estate development were
• Great Depression: it applied to every aspect of economy , during this time
whole banking system crashed , number of foreclosure were at peak, it made
great population shift, it forced to federal to intervene in financial market and
it finally led to formation of FHA for the real estate market .
• Post world war two. After world war, soldier came back which made sudden
rise in the demand of decent house, as the demand was rising in such a way
that supply of house could not match , which finally resulted in market crash
for real estate industry.
These two event forced government to monitor this industry more closely, it led to
formation of regulatory body for real estate like FHA.
6. A developer need to create an environment which can be conducive to its all its
component:
• Government
• Investor
• Community
• End user
• You
These are the people who would be directly getting affected, so a regular feedback and
suggestion are required from them .Two reason are:
For marketability of the project and for the approval

7. A market window is a government-owned or directed institution claiming to operate on


a commercial basis, but that benefit from some level of government support. Examples
are Fannie mae and Freddie Mac
If a developer want to get money from the market so they requires to go through the
market window , market window will through the project and will provide rating , based
on the rating the security will be floated in market to obtain the money.

8. Two reasons for public/private partnership are;


• It involvement of public/private sector from the beginning of the project that is
from planning
• It makes to use relatively less resources for the project
Two reasons against the public/Private partnership:
• It requires public commitment for the approval of project
• It reduces the independence of developer

9. Six phases of development are


• Study Phase
• Feasibility
• Pre construction
• Construction
• Initial Occupancy
• Occupancy and investment management

10. Each phase in development process is very important as they help in building the
project
• Study Phase: It helps to evaluate the site ,do preliminary financial analysis and
market analysis
• Feasibility :It helps to do complete market study , evaluate the program and
design of the project , set the budget and look for perspective tenants
• Pre construction : finalize the site , do the major leases with the important tenants,
obtain the early approval and finalize the development plan
• Construction: monitor the cost in construction, monitor all scheduled activities
and prepare management staffing & service agreement.
• Initial Occupancy : In this all permits are monitored to obtain tenants and
occupancy permits ,continue cost monitoring and report all progress activities
• Occupancy and investment management: Update market studies periodically for
leasing and investment management, manage project leasing effort with tenants
and evaluate potential property renovation or expansion