1.0 The detail process of property development.

Property development is different from construction, although many

developers also manage the construction process. Developers buy land, finance real
estate deals, build or have builders build projects, create, imagine, control and set up
the process of development from the beginning to end. 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, rent out, manage and ultimately sell it.
Sometimes property developers will only undertake part of the process. 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. Development process requires
skills of many professionals such as 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 analyse 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 subcontractors to put the architectural plans into action.
There are many stages in the process of property development. Firstly, the
commencement point of land development process is when a land is considered
suitable for a different or more intensive use or demand for a particular use leads to a
search for a suitable site by an initiator. The initiator can be the landowners
themselves who in turn may also assume the role of the developer at the proceeding
stage. In some cases, the initiator is the public sector and government agencies who
also sometimes play the role of the developer. An accountant also usually features at
this stage to provide advice to the developer and public sector on structure of
partnership. An agent is also often involved in every proceeding stage which is
outlined afterwards. To ascertain what can be constructed on their chosen allotment,
they must first assess the local council’s development and planning policies. Often
these documents are freely accessible by logging onto the local council’s web site, or
alternatively developers can visit the offices and ask to see a hard copy. They must
also undertake a detailed analysis of the neighbourhood character, as maintaining the
traditional nature of an area is an important consideration for local council and their
town planning requirements and regulations.
Secondly, a detailed feasibility study will essentially tell developers whether their
proposed development will be an astounding success or a dreadful flop. It will
highlight any potential problems or risks that developers may face along the way and
whether those issues might make or break the entire project, such as suitability of the
site and what type of development can actually build on it, planning approval, dealing
with the local council, addressing objections from neighbours, budget overruns and so
forth. The bottom line is developers have to know whether the numbers on their
development add up. Without a clear understanding of whether or not they intended
development is feasible from the outset which is, if it realistically makes a decent
return upon completion, there is really no point on proceeding to the next stage. If
they decide that a potential development site is worth exploring further, then they
need to examine the highest and best use of the land. In other words, a feasibility
study is a lot more than just analysing some figures.
Next, this stage actually begins with legal investigation of the site on issues
such as land ownership and planning permission, proceeding with ground
investigation which is a thorough assessment on the physical attributes and
capabilities of the site to accommodate the development. It will end with sourcing and
obtaining financing and funding for the acquisition and development exercises. The
developer can either carry out the legal investigation of the site on its own or engage a
lawyer to conduct the task. A solicitor also plays a role in preparation of legal
agreements of funding arrangement entered into by the developer. The public sector
may also become involved in this stage in situations where a large site with many
occupier and landowners need to be assembled since as the government, they can use
their legal powers of compulsory purchase to acquire the site. An advice to the
developer or public sector on the structure of project funding or financing
arrangement also be provided by an accountant. In most cases, financial institutions
are the providers of finance in land and property development in terms of
development finance in short term money and long term money or financing the cost
of holding the completed development as an investment.
Furthermore, by designing or estimating, the preparation of plans and cost estimates
for the proposed development is undertaken generally carried out simultaneously with
various other stages of development process. At this stage, if the developer is a large
corporate entity already having the qualified professional staff in its stable, then the
preparation of the plans and estimates can be said as to be prepared in-house by the
developer itself. However, it is also common practice, as in the case with the public
sector and some private developers to engage an outside professional team at this
stage comprising the following consultants such as architects, quantity surveyors and
building surveyors. As a property developer, they need to manage the process to
ensure all the permissions are in place and that they have a scheme designed that is
viable. Design is critical to the property development process. A skilled developer
will know how to squeeze, optimise and maximise every single square foot on a site
to achieve the maximum amount of profit the site can yield.
Planning permission approval from the local planning authority before
commencing with the actual development is important in this stage because in some
cases and depending on the original status of the acquired land, the landowner or
developer has to apply from the state authority for conversion and sub-division of the
land before the land can be developed. The permissions also included Town and
Country Planning Act 1976 (Act 172), Street, Drainage and Building Act 1974 (Act
133) and Uniform Building by-Laws 1984. A planning permission must be acquired
after use of land conversion is approved and before building plan process can proceed.
Land surveyors will play their role in survey and measurement of the land. Besides, at
a very basic level, the local planning authority will require the developers to fill out an
application form detailing in the proposals. It will also require them to submit plans of
their existing land or property together with details of their proposed development
works, a statement of ownership, a location plan and the appropriate planning fee. If
they are unsure how best to go about submitting your planning application, rather than
guessing and potentially wasting everyone’s time and money, they should research the
process thoroughly and if need be, contact the local planning authority for advice on
how best to approach the submission of the application. Planners in the form of
politicians are responsible for approving the development plans drawn up by
professionals in accordance with policy which they have earlier set down and
approving and refusing the applications for permissions for development proposals.
Planners in the form of professionals or planning consultants on the other hand come
up with the development plans on behalf of the developers and the ones who will
negotiate with the local planning authority as to the permission that allow for the
‘highest and best use’ development particularly with large or sensitive schemes.
This planning permission can also be obtained by an architect if a planning consultant
is not employed. Preliminary discussions will take place between the planning
consultant and the planning department at the respective local authorities during the
layout plan or planning permission submission process. The planners shall have an
effort to work together with the planning department of the respective local authorities
on fulfilling the checklist requirement prior to submitting a final layout plan for
approval. The planning approval is decided by the planning approval committee at the
local authorities where the OSC (One-Stop-Centre) is located. As a result, a
systematic planning process has been benefited the developers, consultants and the
authorities. There is no minimum land area exempted from planning permission. The
local planning authority, usually via the council’s planning department will look to
assess what neighbours and local residents think and feel about the proposals. The
council will allow around three weeks for local people to respond or air their concerns
about the prospective development. After these views have been taken on board, a
planning officer will then visit the development site to review the local area, the
submitted plans, the site layout and the original building for themselves which, this
will allow them to see and feel the development and get a better idea of what is
included in the application.
For implementation, the raw materials of the development process are in place. Once
again various actors and sub-actors that have been mentioned before will come
together at this stage performing their relevant roles. Architects administer the design
and build contracts and certify completion of the building works. Quantity surveyors
monitoring the construction and approving stage payments to the contractor, and
participating in the administration and management of design and build contracts.
Building contractors are the main actor in this stage by undertaking the construction
of the development scheme. A building contractor who undertakes and oversees this
entire stage of land development with relevant expertise, this building contractor may
also be the management contractor who manages the various sub-contractors for the
developer. There are three types of engineers involved in this stage. They are civil
engineers, structural engineers, mechanical and electrical engineers and project
managers. Civil engineers’ role is in supervising major infrastructure works or ground
work. Structural engineers’ role is in advising architects and quantity surveyors as to
the design of the structural elements of the building. Mechanical and electrical
engineers are the team that designs all the services within building of large and
complex schemes meanwhile project managers are normally employed if the land
development schemes are large and complicated to manage the professional team and
the building contract on behalf of the developer.
By handing over or renting or leasing, it should be depending on the type of
development. The main person at this last stage which can also be the first stage
depending on the type of the development is the property or estate agent who is the
link between the developer and the occupier. Agents may also be used by developers
to assist them in securing the finance for a development scheme. The agents are
professionals who include chartered surveyors, registered valuers and licensed real
estate agents. Apart from the chartered surveyors, registered valuers and licensed
agents, there are other parties who are also involved in the development process
depending on their area of expertise and the scale of the development. This includes
highway engineers, landscape architects, soil specialists, public relations consultants
and marketing consultants. In practice, the land development process also does not
always rigidly follow the sequence of stages as mentioned above. Some stages may
overlap and occur simultaneously.
Under the Sale & Purchase Agreement (SPA) signed with the developer, they
have certain obligations to fulfil when defects are detected within the Defects
Liability Period (DLP) which is usually 12 months. The Defect Liability Period
(DLP) is defined as the period of time from the date homeowners receive delivery of
vacant possession and keys to the property, where the developer is responsible to fix
any defects. The Defect Liability Period (DLP) is 24 months starting from the receipt
of the keys. Within this period, the homeowners will need to check for any damage,
defects and poor or faulty workmanship. Any issues need to be reported back to the
developer to get them repaired for free. After the homeowners have received the keys
to their new property, they actually have 18 months to report any defects during the
defect liability period. However, the developer advice is does not delay the report.
The developers will want to make sure every defect has been fixed before the
homeowners move it. Expect to spend several hours to do a thorough check of the
new property and mark out any defects clearly. With a bit of effort, they will soon
have the house in tip top condition and ready for interior design and renovation.
While property development can be very lucrative, many beginning property
developers get themselves into trouble because they do not know what they should
know. Property development arises from the need to accommodate the increase in
demand for more and better housing accommodation, more and efficient
transportation system, better facilities and amenities due to increase in population,
income, knowledge needs, entertainment needs and health and lifestyle awareness.
Using an institutional economic perspective, formal and informal rules within socio-
economic, political and administrative frameworks need to be amended from time to
time when necessary due to the dynamics of institutional changes affecting the
property development decisions.