In order to get the most out of your real estate development endeavors, it’s important to follow a systematic approach to the process. By following the steps in the correct order, you’ll be less likely to make mistakes, which ultimately lead to a loss of money. There are also different disciplines involved in the process.
Private sector vs public sector
One big difference between the private sector and the public sector in real estate development is the way they handle escalating ground rents. A developer will seek to have the proceeds go toward the improvements to the property, while the public sector will seek to recover the land’s cost. Often, this causes tensions and appraisals.
Both public and private sector companies have their own advantages and disadvantages. The former has more flexibility and is better able to raise funds from the market, whereas the latter can rely on government backup. Moreover, private sector companies often have a more relaxed work culture and better pay than their public counterparts.
Impact of government regulation on real estate development
When looking at the real estate market, it’s important to consider the impact that government regulation has on development. For instance, certain jurisdictions have more stringent regulations than others, and this can make new real estate development more expensive. Government regulations also affect property tax rates, which affect property values. These factors can affect a city’s long-term growth prospects. They can also affect market rents, vacancy rates, and population growth and income growth prospects.
In addition, land-use regulations may have amenity and scarcity effects. Regulations can also be closely related to other private and government actions, making their impact difficult to assess. For example, decisions on zoning can affect other government actions, such as funding for roads and urban growth boundaries. In addition, zoning policies may impact the value of undeveloped properties.
Various disciplines involved in real estate development
The field of real estate development is vast and includes many different disciplines. In addition to finance, design, and construction, the industry involves several other factors, such as land use and planning. Graduates with a bachelor’s degree in real estate development can pursue a variety of career options in the industry.
To be successful in this field, self-discipline is crucial. Jerome Myers, Managing Director of The Bill Bhangal Myers Development Group LLC, transitioned from a full-time job to a career in real estate and faced many challenges along the way. Fortunately, he overcame these challenges and thrived. He shares his tips for surviving the transition to a career in real estate development.
Creating value through construction
Creating value through construction is a critical component of the real estate development process. This process is highly leveraged and can produce profits of incredible proportions. As such, it requires a highly effective plan of operation that takes into account all of the project’s variables and problems. A well-developed plan will help developers maximize the overall value of their properties, while also minimizing the risks of project failure.
Value engineering can be applied at any stage of a commercial real estate development project. However, it is most beneficial to implement the process early on, when both the developer and contractor are clear about the costs they anticipate. It is also advisable to engage the architect/engineer team early in the project, and include them in the decision-making process. This way, they can ensure that any proposed changes don’t negatively affect the overall design.
Social capital factor in real estate development
Many successful local businesses rely on the social capital of their customers and neighbors, because they have greater access to resources can be expanded more quickly when necessary. The emergence of gangs and crime in an area reduces social capital and is harmful to local businesses. Potential customers avoid such neighborhoods.
The level of social capital in a community can be measured by the number of groups that have a high percentage of membership. High-membership groups contribute more to social capital than low-membership groups, but many low-membership groups also contribute significant capital. It is not unusual for people to belong to multiple groups. For example, a community in San Luis Obispo, California, may have 22,000 different groups, all of which contribute to the neighborhood’s social capital.