Have you ever been interested in being a developer or owning properties? This article will satisfy your basic curiosity about the main stakeholders and parts in the real estate development process. Let’s dip our toes in the real estate waters, shall we?
The developer is the main idea generator or brain behind a building and could either be an individual or a corporate body. The developer coordinates all activities, converting ideas from paper to real property.
Land Acquisition and Market Research
The journey usually begins with acquiring a piece of land for development. Upon acquisition of the land, there is a clearer picture of which idea best suits the location. A feasibility study can be conducted which consists of intensive research that goes into how viable the idea is with projections to support the business case. A thorough investigation of the current market price and demand analysis are key components of this study and will inform decision making moving forward.
Based on recommendations from the feasibility study, funding can be secured or made available for the project. The financial framework is built at this point and this gives headway for the project to actually begin. Financing is usually gotten from a local bank in the form of a loan once all conditions have been fulfilled. On the other hand, if an individual or company is able to mobilise his or its own resources, then debt is not needed.
Many developers aim for a healthy balance between self- financing and debt. This is where off plan sales come in. The property idea is sold to interested parties even before construction begins. Real construction then begins when about 30-40% of the property has been sold without a single brick being laid. Ideally, the more self-financing a developer is able to raise through off plan sales, the better. This is because cost of debt in the form of interest will be mitigated.
All protocol must be duly observed. It’s important to get government approvals before construction starts. The developer also needs to be in good standing with all stakeholders, environmental consultants, legal houses, and local assemblies, just to name a few. All permits must be secured and the neighborhood psyched for the project to begin.
After laying these solid foundation bricks, the real work begins. We continue with the project team.
The Project Team
Before project work begins, an internal project team is formed. This team is made up of a host of specialists from different required fields.
The project manager is head of the project team and coordinates all aspects of the project. He reports to the director of development or COO. He is usually a very experienced individual with many completed projects under his belt.
The project coordinator works closely with the project manager, he reports to and is given direction by the project manager.
Marketing Coordinator (Consultant)
The project may require the experience of a marketing consultant to develop and coordinate a strategic marketing plan to create customer value for the project.
The contractor is hired by the organization to build the project according to the plans, specifications and timelines on which the contractor bid and for which he was awarded the contract. The contractor works hand in hand with the architect and reports to the project manager.
The construction supervisor works for the contractor and with direction from the contractor, may also report to the project manager. The construction supervisor supervises the daily operations at the construction site and makes recommendations to solve problems. The construction supervisor works with the project manager and the architect to resolve differences as they develop including change orders, draw requests, and other concerns, to the developer’s satisfaction.
The architect is one of the first to be hired – often to lead concept workshops, but primarily to design the project according to the criteria set forth by the developer and within the restraints of the developer’s budget. The architect is responsible for value engineering and may assist the developer in putting together an efficient team to build out the project. The architect signs off on the final drawings and may be hired at an additional expense to inspect the project and confirm that the project is being built to specification.
A title company is selected by the developer to close the financing on the project, provide title insurance for the project, review the drawings and disburse payments for the project, receive all lien waivers on the project, and perform the final closing and reconciliation for the disbursement of all funds for the project. The title company works with the project manager on any discrepancies or problems that need resolution and may establish an escrow to hold funds for final distribution.
A major piece of the project is the legal component. The legal documents of the project will be drawn up or reviewed by outside counsel who may or may not work on a pro-bono or reduced fee arrangement with the CDC. The legal work is critical to the success of the project.
After the property has been built, come in the property managers. They see to the day-to-day management and maintenance of the facility to bring value to both the developer and the client/user.
It takes a man with an idea and a team to execute the idea to perfection. Becoming a developer starts with knowing these basic fundamentals. At Devtraco Plus, we are equipped with a team of great standing who have driven ideas and renderings to remarkable developments which have won us several awards in the industry.
Some of our developments are as follows: Acasia at Cantonments, The Edge at Labone, Nova at Roman Ridge and The Niiyo at Dzorwulu.
These are all brainchilds of Devtraco Plus