THE PROPERTY

DEVELOPMENT
BY
SR DR MOHD NADZRI JAAFAR
INTRODUCTION
• Complex – many agencies, public and private, large and small,
undertaking development in a variety of organizational forms and
legal entities.
• Diverse – involves a vast number of businesses across a wide range of
sectors, having different aims, objectives and modes of operation.
• Also risky, cyclical, highly regulated and lengthy in production.
• It comprises 3 major groups:

Consumers

Providers Of
Public Producers
Infrastructure
MODELS OF THE DEVELOMENT PROCESS
• Healey 1991
Models Descriptions
1) Equilibrium Models o Development activity is structure by economic signals about
effective demand, as reflected in rents, yields etc.
o Derive directly from the neo-classical tradition in economics.
2) Event Sequence o Focus on the management of stages in the development process.
Models o Derive primarily from an estate management preoccupation with
managing the development process.
3) Agency Models o Focus on actors in the development process and their
relationship.
o Developed primarily by academics seeking to describe the
development process from a behavioral or institutional point of
view.
4) Structure Models o Focus on the forces which organize the relationships of the
development process which drive its dynamics.
o Grounded in urban political economy.
PROPERTY DEVELOPMENT: A FIVE-PHASE PROCESS
Concept And
Initial 1
Consideration

Site Appraisal
And Feasibility 2
Study

Detailed Design
And Evaluation 3

Contract And
Construction 4

Marketing,
Management 5
And Disposal
 Phase 1: Concept And Initial Consideration
1) Establishing objectives for the developments
organization and generating ideas to meet them
2) Determine a basic strategy for the development
organization
3) Undertake market research and find a suitable site
 Phase 2: Site Appraisal And Feasibility Study
1) Undertake a more refined appraisal of the viability of
the proposed project, taking into account market
trends and physical constraints
2) Consult with the planning authority and other
statutory agencies with regard to the proposed
development
3) Identify the likely response from other interested
parties to the proposed development
4) Establish the availability of finance and the terms on
which it might be provided
 Phase 3: Detailed Design And Evaluation
1) Decide the appointment of the professional team and
determine the basis of appointment
2) Prepare a brief that outlines the basic proposals for design,
budgeting, taxation, planning, marketing and disposal and
sets out all the management and technical functions,
together with the boundaries of responsibility
3) Arrange for the design team to prepare and submit
preliminary detailed drawings for the planning approvals
and budget forecasting
4) Submit the planning application and negotiate with the
local authority, statutory undertakers and other interested
parties
5) Make any necessary changes to the scheme, adjusting the
various programmers and obtaining final approvals from
all concerned
 Phase 4: Contract And Construction
1) Establish the preferred procedure for selecting a
contractor, arrange the appointment and approve the
various documents
2) Establish a management structure to take account of
the communication between the parties and the
responsibilities borne by all those involved, paying
particular attention to administration, accounting,
purchasing, approvals report and meetings
3) Set up an appraisal system to monitor the viability of
the project throughout the building period
4) Ensure that on completion of the development,
arrangement are made to check all plant, equipment
and buildings before they are commissioned
 Phase 5: Marketing, Management And Disposal
1) Determine the point at which a marketing campaign
is best started, how it should be conducted and by
whom
2) Decide on the form of lease or sale contract, so as to
preserve an optimum return on the investment
3) Establish a management and maintenance programme
and where the development is to be retained or a
prospective occupier agrees, recruiting and training
the necessary personnel to provide a smooth handover
4) Maintain the security and safety of the building at all
times
5) Monitor the performance of the retained agents
6) Reorganize the financial arrangement where necessary
PARTICIPANTS IN THE DEVELOMENT PROCESS
• Two groups of participants in the property development process

Development
Agencies

Members of
the
development
team
 Development Agencies
1. Property development companies
2. Financial institutions
3. Construction firms
4. Public sector agencies
5. Large landowners
6. Business concerns
 Members of the development team
1. The developer 7. The builder
2. Project manager 8. The agent
3. Construction 9. The valuer
manager 10. The solicitor
4. The architect 11. The specialist team
5. Engineers members
6. The quantity
surveyor
1. THE DEVELOPER
• Various background - building, estate agency, engineering, finance, law,
architecture or business management.
• They also differ in the extent to which they are involved in the
actual process of development.
• Developer is an entrepreneur: someone who can identify the need for
a particular property product and is willing to take the risk to
produce it for a profit.
• Roles:-
Promote and negotiator with regularly and approved authorities as
well as other parties with an interest in the proposed development.
Market analyst and marketing agent regarding potential tenants or
purchasers.
Securer of financial resources from the capital markets, employer
and overall manager of the professional team engaged on the project.
2. PROJECT MANAGER
• Project manager has been defined as:
• The overall planning, control and co-ordination of the project from
inception to completion aimed at meeting a client’s requirements in
order that the project will be completed on time within authorized
cost and to the required quality standards. (CIOB 1992)
• The duty of the project manager has been stated to be:
• Providing a cost effective and independent service correlating,
integrating and managing different disciplines and expertise to
satisfy the objectives and provisions of the project brief from
inception to completion. The service provide must be to the client’s
satisfaction, safeguard his interests at all times and where possible,
give consideration to the needs of the eventual user of the facility.
(CIOB 1992)
3. CONSTRUCTION MANAGER
• Construction management – is restricted to the building-related
stages of the development process.
• Construction manager might be an architect, a builder, an engineer, a
building surveyor or a quantity surveyor and extensive practical
experience in the type of project being built is essential.
• The prime task is similar to that of the project manager, seeing that
the building comes in to time, to cost and to specification.
4. THE ARCHITECT
• The architect is fully concerned with several major elements in the
development process: the acquisition of planning approval, the design
of the building and the control of the building contract.
• Architects’ services: the work stages (Parnell 1991)
• Inception
• Feasibility
• Outline proposals
• Scheme design
• Detailed design
• Production information
• Bills quantities
• Tender
• Project planning
• Operations on site
• Completion
5. ENGINEERS
• Working closely with the architect, they combine to ensure that the
plans are structurally sound and that the mechanical systems will
service the building adequately.
• There are several engineers involved:
• Structural engineer – provide the skills necessary to create
structures that will resist all imposed forces over the life-span of
the structure with an adequate margin of safety.
• Geotechnical engineer – responsible to the structural engineer, the
geotechnical engineer is retained to perform initial tests of the
bearing capacity of the soil, evaluate drainage conditions and
generally assist in planning to fit the proposed project onto the site
in an optimum manner, balancing physical effectiveness with building
costs.
5. ENGINEERS….CONT.
• Mechanical and electrical engineer or building services engineer –
supply the live blood of the building such as heating, water supply,
lighting, air conditioning, communication, fire precautions and lift
services.
• Environmental engineer – is playing an increasingly important role
on the design team. Usually dealing with water and soil run-off onto
surrounding property.
6. THE QUANTITY SURVEYOR
• Basically charged with the task of cost analysis and cost control.
• The function of QS was restricted to the preparation of bills
quantities and the variations of accounts.
• Involved in providing cost advice throughout the development process
and remain concerned with supplying cost information through the
feasibility, outline and detailed design stages, culminating in an
agreed cost plan linked to an acceptable preparatory design.
• Followed by a process of cost checking, assistance on tendering
procedures and contractual arrangements, the production of
specifications for the main contract and nominated sub-contractors,
examination and report on submitted tenders and negotiations,
approval of variation orders, interim certificates and final accounts.
7. THE BUILDER
• Viewed as a contracted agent at the procurement stage.
• Builder’s function in the development process can be described as
follow (Somers 1984):
• Feasibility
• Outline proposal
• Scheme design
• Detailed design
• Construction period
• Post-contract
8. THE AGENT
• Contributor to the overall process of marketing.
• Agent principal functions:
• Find suitable sites or properties for development, redevelopment or refurbishment on behalf
of clients.
• Receive instructions and liaise with the developer at an early stage in the project to
consider the overall concept of the proposed scheme and in particular, to advise on those
features of design and layout that could add to or detract from the marketability of the
completed property.
• Provide general economic advice and investigate rental levels and capital values in respect
of the viability of the project.
• Comment on the planning implications and assist in discussions with local authority
officers.
• Advise on potential occupiers and tenant mix.
• Advise on the possible need for special building and accupiers’ services, as well as
considering the general operation of future management services.
• Advise regularly throughout the period of development on prevailing market conditions.
• Advise, arrange and implement a marketing strategy.
• Monitor responses and handle prospective occupiers’ inquiries.
• Conduct negotiations with interested parties and investigate the credentials of potential
purchasers or tenants.
• Advise on and assist with the provision of development finance.
• Negotiate and conclude the finale sales or lettings.
9. THE VALUER
• The valuer might be asked to estimate the likely value of
land identified for a development project, the possible level
of profit that might be derived from undertaking the
scheme, or the capital value of the completed project.
• Separate valuations that have to be conducted for such
purposes as land assembly, compensation, taxation, funding,
letting, sales and asset valuation.
• The initial valuation will almost certainly have to be
revised and updated during the development process, as the
picture of probably income and actual expenditure become
clearer.
10. THE SOLICITOR
• The service of a solicitor are un avoidable in the property
development process.
• The involvement of legal work depend upon the complexity of the
scheme and the number of parties concerned.
• Solicitor is well suited to undertake several roles: (Hawkins 1990)
• Of advisor, especially in the complex area of planning law and
construction contract law
• Negotiator, to explain, to persuade, to reach agreement and to
discover for and between the various parties
• Advocate at meeting, representations of all kinds and inquiries
• Co-ordinator, between all parties to the project and all those who
can regulate or otherwise have an influence upon it
• Draftsman, of all the relevant formal documentation
11. OTHER SPECIALIST TEAM MEMBERS
• The most common of these can be listed as follows:
• Accountant
• Town planning consultant
• Landscape architect
• Interior design
• Facilities manager
• others
THANK YOU