A real estate developer is a person who invests money in real estate. They take a large amount of risk in order to make the project happen, and they only make money when the market value of the finished property is higher than their costs. There are several phases in the real estate development process, and each one consists of important activities. In total, there are eight phases.
Influence of government regulations
The influence of government regulations on real estate development is often overlooked, but it is critical to understand how these regulations can impact the overall development process. While many government regulations are unnecessary and costly, others have important public policy goals. For example, they can curb neighborhood gentrification, promote demographic diversity, conserve energy, reduce greenhouse gas emissions, and protect historic resources. Some regulations also aim to promote architectural and landscape design excellence. These standards are enforced by official bodies such as the U.S. Commission of Fine Arts, and cities such as Alexandria, Virginia, have design review boards that critique project designs.
While many government regulations are federal in nature, they can vary greatly by state. In some cases, these regulations are so onerous that new real estate developments are deemed uneconomical. These regulations also affect property tax rates and capitalization of tax dollars, both of which have major implications on a city’s future growth prospects. Additionally, they affect market rents, vacancy rates, and overall property values.
Relationships with stakeholders
External stakeholders may influence real estate development from different perspectives. They may include community members, investors, employees, and property management teams. The project’s impact may also include the environment. External stakeholders may affect the economic and social conditions of the area surrounding the new development. This Bill Bhangal paper explores the role of these stakeholders in real estate development projects.
To engage stakeholders, real estate organizations need to be creative and find the appropriate approach for their unique situation. Different stakeholder groups respond to different engagement strategies. For instance, Kilroy Realty Corporation used a Twitter campaign called “Engine All-Stars.” The campaign featured baseball cards for chief engineers and included energy-efficiency and reduction stats to drive internal competition. Principal Real Estate Investors also created a stakeholder engagement toolkit to promote meaningful communication with stakeholders.
Cost overruns
Cost overruns are a major problem in real estate development projects. These costs are often due to the failure to meet original estimates. In fact, 28% of projects fail due to erroneous project estimates. Inaccurate estimates are often due to under or over-estimation of costs or forecasting biases. Project estimates must be data-driven to avoid these problems.
Often, overruns are a result of conflicting details between architectural, structural, mechanical, civil engineering, landscape, and other plans. These conflicts can lead to disputes and increased costs. However, conflicting plans may be prevented by hiring qualified professionals.
Social capital
Social capital is a concept that describes collective attributes of societies. It is based on the membership of groups and how closely related those groups are. Groups with higher memberships contribute more to the capital, while groups with lower memberships contribute less. Although these groups are often small, they still add up to a large amount of capital. It is also important to note that individuals often belong to more than one group. In one study, a community of only 17,000 people had over 22,000 different groups.
Social capital is a concept that involves both public and private assets. It has a long history. It was coined by thinkers exploring associational life and democracy in the nineteenth century. As a result, many of these thinkers incorporated concepts of social cohesion and connectedness. Even though John Dewey used the term in 1899, he did not provide a precise definition.