PROPERTY DEVELOPMENT PROCESS

Subtitle
Definition of Development
• The process of converting land to a new purpose by constructing buildings or making use of its
resources.
• Is a process that involves changing the use of land to produce buildings for occupation
• The business of renovating old buildings or building new ones on their site
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Land with Development VS Land without development
Highest and Best Use

-It states that the value of a property is

directly related to the use of that property;
Physically the highest and best use is the reasonably
Use of a parcel of land which will produce
Possible probable use that produces the highest
the greatest current value
property value. This use, the Highest and
Best Use, may or may not be the current
Legally use of the property
Permissible

Highest
and Best
Use An example would be an agricultural land
parcel in the path of development. It's
Maximally highest and best use might be for a
Productive shopping center rather than an onion field.

Financially
Permissible
6 STEPS IN DEVELOPMENT PROCESS
1. The Idea

2. The Site

3. The Feasibility

4. The Contract & Appovals

5. The Improvement

6. Next Project

1. The Idea
• Every real estate development project begins
with an idea.
• The idea embodies developers
preconceptions about projects (sizes,
location, tenants, buyers)
2. The Site
• Involve site selection, site analysis and
acquisition of development rights.
• The analysis of the sites includes
investigations into legal ownership, current
zoning, soil conditions, topography,
visibility and access.
 3. The Feasibility
Information from the market analysis component of the feasibility study
helps architects make preliminary drawing and engineers develop cost
estimates

The feasibility study, architectural drawings and cost estimates along with
an appraisal constitute a major portion of the loan submission package
submitted to construction and permanent lenders.

A negative feasibility study means the project recycles to an earlier stage

or terminate
4. The Contract & Approvals

• The decision to commit to project means signing formal contracts with members of
development team and others.

• This process represents one of the most important activities during the development process.
Example; if zoning approval, building permits and others approvals are not granted, the
project cannot legally proceed to the next stage.

• With contracts signed and all approvals granted, developers stand ready to initiate the physical
development and construction of real estate.
 5. The Improvement
TIMELY-MANNER
• The developer must make certain the project
prooceds in a timely manner.
• Eg; every month, interest accrues on the
growing unpaid balance of the development
or construction loan.
• Thus to ensure timely progress, developer
must work closely during this period with
the general contractor, construction manager,
engineer, architect, etc.
MARKETING
• Leasing activities for rental properties and
sales activities for salable properties begin
before the the project management stage.
• The marketing effort becomes a high
priority for developers because the
successful project depends on the timing and
absorption of the project into the market.
• Technically, project completion occurs when all of the
physical elements of the improvements are in place and
local building code enforcement officials issue the
required CCC.
• 6. Next Project
• These events officially end the relationship between
developers and most members of the development team.
REGULATORY BODIES IN THE DEVELOPMENT
PROCESS
Click icon to add picture
LANDOWNER

DEVELOPER

FUNDER
DEVELOPMENT
BUILDERS/CONTRACTORS ACTORS
ADVISERS(PROFESSIONAL)

OCCUPIER

PUBLIC SECTOR