The 4 Phases of Real Estate Development
Would you like to develop your own project or get a better understanding of how to start doing that? The following article will explain the real estate development process in four different phases.
Phases of Real Estate Development
- Location seeks capital and idea
A company, for example, seeks a project idea and an investor for an existing property they own. This is often the case if the companies’ core business is not real estate related. If you are an architect you probably have experienced the situation when an investor asks you to develop an idea for a special site.
- Idea seeks location and capital
In this case a precise idea or demand is existing and the goal is to find a suitable location and provider of capital.
- Capital seeks location and idea
In this case an investor wants to invest in real estate due to different reasons, i.e. pension funds or other institutional investors.
- Market analysis
- Location analysis
- Usage concept
- Competition analysis
- Risk analysis
- Cost analysis
Graaskamp defines the term feasibility as follows: “A real estate project is feasible when the real estate analyst determines that there is a reasonable likelihood of satisfying explicit objectives when a selected course of an action is tested for fit to a context of specific constraints and limited resources.” (Grasskamp, James A. “A Rational Approach to Feasibility Analysis,” The Appraisal Journal, October 1972.)
The extensive investigation and research of the Feasibility Study should guide you to a positive or negative decision for the project.
In the Project Management phase the developer represents the role of the client. The design will be concretized and if necessary the developer can delegate client tasks to an external construction project manager. This phases’ purpose is the overall planning, coordination, and control of the project from beginning to completion. Architects as Developer have a significant knowledge advantage in this phase due to their education and experience.
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