Real estate development
Overview
 
Real estate development, or Property Development, is a multifaceted business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...

, encompassing activities that range from the renovation
Renovation
Renovation is the process of improving a structure. Two prominent types of renovations are commercial and residential.-Process:The process of a renovation, however complex, can usually be broken down into several processes...

 and re-lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...

 of existing building
Building
In architecture, construction, engineering, real estate development and technology the word building may refer to one of the following:...

s to the purchase of raw land
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...

 and the sale of improved land or parcels to others. Developers are the coordinators of the activities, converting ideas on paper into real property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

.

Real estate development is different from construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...

, although many developers also construct.
Encyclopedia
Real estate development, or Property Development, is a multifaceted business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...

, encompassing activities that range from the renovation
Renovation
Renovation is the process of improving a structure. Two prominent types of renovations are commercial and residential.-Process:The process of a renovation, however complex, can usually be broken down into several processes...

 and re-lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...

 of existing building
Building
In architecture, construction, engineering, real estate development and technology the word building may refer to one of the following:...

s to the purchase of raw land
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...

 and the sale of improved land or parcels to others. Developers are the coordinators of the activities, converting ideas on paper into real property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

.

Real estate development is different from construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...

, although many developers also construct. Developer Louis Lesser
Louis Lesser
Louis Lesser is an American business magnate. He received frequent press coverage in the 1950s and 1960s for his ability to earn money and for his various business operations. He sold the Taj Mahal to New York real estate developer Donald Trump...

 drew the distinction in a 1963 New York Times article, "Developing is the key word. 'We don't build ourselves', Mr. Lesser stresses. 'We buy the land, finance the deal, and then we have the best builders build under bond at a fixed cost.'"

Developers buy land, finance real estate deals, build or have builders build projects, create, imagine, control and orchestrate the process of development from the beginning to end. Developers usually take the greatest risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...

 in the creation or renovation of real estate—and receive the greatest rewards. Typically, developers purchase a tract of land, determine the marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...

 of the property, develop the building program and design, obtain the necessary public approval and financing, build the structure, and lease, manage, and ultimately sell it. Developers work with many different counterparts along each step of this process, including architects, city planners, engineers, surveyors, inspectors, contractors, leasing agents and more. In the Town and Country Planning context of the UK, 'development' is defined in the Town and Country Planning Act 1990 s55.

Statutory definition of development in the United Kingdom

'Development' is defined by statute in the Town and Country Planning Act 1990 s55(1), as 'the carrying out of building, engineering, mining or other operations in, on, over or under land, or the making of any material change in the use of any buildings or other land'. This definition is clarified by the remainder of s55 and the inclusion of the Generally Permitted Development Order 1995 and the Use Classes Order 1987.

Paths for entering the development field

No single path leads automatically to success in real estate development. Developers come from a variety of disciplines— construction, lending, architecture, law and accounting, among others. Recent specialized programs that award a Master of Real Estate Development (MRED) degree are also available. The graduate programs in real estate development are the most comprehensive education in the industry. Other formal education includes a Master of Science in Real Estate (MSRE), or an MBA.

Organizing for development

A development team can be put together in one of several ways. At one extreme, a large company might include many services, from architecture to engineering. At the other end of the spectrum, a development company might consist of one principal and a few staff who hire or contract with other companies and professionals for each service as needed.

Assembling a team of professionals to address the environmental, economic, physical and political issues inherent in a complex development project is critical. A developer's success depends on the ability to coordinate the completion of a series of interrelated activities efficiently and at the appropriate time.

The development process requires skills of many professionals: architects, landscape architects, civil engineers and site planners to address project design; market consultants to determine demand and a project's economics; attorneys to handle agreements and government approvals; environmental consultant
Environmental consulting
Environmental consulting is often a form of compliance consulting, in which the consultant ensures that the client maintains an appropriate measure of compliance with environmental regulations...

s and soils engineer
Geotechnical engineering
Geotechnical engineering is the branch of civil engineering concerned with the engineering behavior of earth materials. Geotechnical engineering is important in civil engineering, but is also used by military, mining, petroleum, or any other engineering concerned with construction on or in the ground...

s to analyze a site's physical limitations and environmental impacts
Environmental impact assessment
An environmental impact assessment is an assessment of the possible positive or negative impact that a proposed project may have on the environment, together consisting of the natural, social and economic aspects....

; surveyors and title companies to provide legal descriptions of a property; and lenders to provide financing.

Land development

Purchasing unused land for a potential development is sometimes called speculative development.

Subdivision of land is the principal mechanism by which communities are developed. Technically, subdivision
Subdivision (land)
Subdivision is the act of dividing land into pieces that are easier to sell or otherwise develop, usually via a plat. The former single piece as a whole is then known in the United States as a subdivision...

 describes the legal and physical steps a developer must take to convert raw land into developed land. Subdivision is a vital part of a community's growth, determining its appearance, the mix of its land uses, and its infrastructure, including roads, drainage systems, water, sewerage, and public utilities.

In general, land development is the riskiest but most profitable technique as it is so dependent on the public sector for approvals and infrastructure and because it involves a long investment period with no positive cash flow.

After subdivision is complete, the developer usually markets the land to a home builder or other end user, for such uses as a warehouse or shopping center. In any case, use of spatial intelligence
Spatial intelligence
Spatial Intelligence is an area in the theory of multiple intelligences that deals with spatial judgment and the ability to visualize with the mind's eye...

 tools mitigate the risk of these developers by modeling the population trends and demographic make-up of sort of customers a home builder or retailer would like to have surrounding their new development

Notable developers

  • Allen, Paul
    Paul Allen
    Paul Gardner Allen is an American business magnate, investor, and philanthropist. Allen co-founded Microsoft with Bill Gates...

     - Microsoft
    Microsoft
    Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...

     founder
  • Bellway
    Bellway
    Bellway plc is a major British residential property developer based in Newcastle upon Tyne. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.- History :...

  • Bluegreen Communities
    Bluegreen Communities
    Bluegreen Communities is a division of Bluegreen Corporation, a publicly traded land developer on the New York Stock Exchange. Bluegreen develops planned residential communities or planned unit developments by acquiring large sections of unimproved land outside major U.S. cities and divides them...

  • Candy & Candy
  • Cheung Kong Group - Hong Kong SAR, China
  • Corcoran, Barbara
    Barbara Corcoran
    Barbara Ann Corcoran is an American businesswoman, investor, speaker, business consultant, syndicated columnist, author, and television personality. As a television personality, she is a "Shark" investor on ABC's Shark Tank.She graduated from St. Thomas Aquinas College with a degree in education...

  • Delfin Lend Lease
    Delfin Lend Lease
    Lend Lease Communities is the Australian Master Planned Communities arm of property and infrastructure company Lend Lease Corporation, an Australian-based global property and infrastructure solutions company.-History:...

  • DLF Universal
  • Louis Dubin
    Louis Dubin
    Louis Myerberg Dubin is a prominent fourth-generation New York City real estate developer notable for developing upscale condominiums, typically in large east-coast United States cities. His firm Athena often sold condominiums to middle and upper-middle class buyers by touting affordability and...

  • Emaar Properties
    Emaar Properties
    Emaar Properties , based in the United Arab Emirates, is a Public Joint Stock Company listed on the Dubai Financial Market. Established in 1997 with an initial paid-up capital of AED 1 bn, Emaar Properties is currently the Persian Gulf region's largest land and real estate developer...

  • Helmsley, Harry
    Harry Helmsley
    Harry B. Helmsley was an Americanentrepreneur who built a company that became one of the biggest property holders in the United States...

    , deceased husband of Leona Helmsley
    Leona Helmsley
    Leona Mindy Roberts Helmsley was an American businesswoman and real estate entrepreneur. She was a flamboyant personality and had a reputation for tyrannical behavior that earned her the nickname Queen of Mean...

  • Hines, Gerald D.
    Gerald D. Hines
    Gerald D. Hines is the founder and chairman of Hines, a privately held real estate firm with its U.S. headquarters located in Houston, Texas, and its European headquarters located in London....

  • IRSA, Argentina
  • The Irvine Company , Donald Bren
    Donald Bren
    Donald Bren is an American businessman who is Chairman of the Irvine Company, a US Based real estate developer, which he wholly owns.-Early Life and Education:...

     , California
  • Jorge M. Perez
    Jorge M. Perez
    Jorge M. Pérez is a Cuban American real estate magnate and author. Pérez was born in Argentina of Cuban parents and lived in Colombia before moving to Miami in 1968. He is graduate of Long Island University C.W...

  • KB Homes
  • Lesser, Louis
    Louis Lesser
    Louis Lesser is an American business magnate. He received frequent press coverage in the 1950s and 1960s for his ability to earn money and for his various business operations. He sold the Taj Mahal to New York real estate developer Donald Trump...

     - Western United States, International
  • Levitt, William
    William Levitt
    William Jaird Levitt was an American real-estate developer widely credited as the father of modern American suburbia. He came to symbolize the new suburban growth with his use of mass-production techniques to construct large developments of houses selling for under $10,000...

  • Maharishi Heaven on Earth Development
    Maharishi Heaven on Earth Development
    Maharishi Heaven on Earth Development Corp. is a for-profit real estate developer associated with Maharishi Mahesh Yogi and his Transcendental Meditation movement...

  • Mirvac
  • Olympia and York
    Olympia and York
    Olympia & York was once a major international property development firm based in Canada. The firm built major financial office complexes like Canary Wharf in London, the World Financial Center in New York City and First Canadian Place in Toronto...

  • Portman, John
    John Portman
    John C. Portman, Jr. is an American architect and real estate developer widely known for popularizing hotels and office buildings with multi-storied interior atriums....

  • The Related Companies
    The Related Companies
    The Related Companies L.P. is a real estate developer, manager and financier. The developer of numerous high-profile projects in New York City and around the United States, Related is best known for its historic 2.8 million-square-foot $1,700,000,000 Time Warner Center on Columbus Circle...

  • Rouse, James
  • Ryan Companies US, Inc.
    Ryan Companies US, Inc.
    Ryan Companies US, Inc. is a national builder, developer, designer and real estate manager.Employing nearly 600 workers, Ryan is a construction company that specializes in integrated project delivery, building information modeling , Lean construction practices and sustainable design for office,...

  • Sino Group
    Sino Group
    Sino Group is one of the largest property companies in Hong Kong. The Group comprises private holding companies owned by the Ng family, and three publicly listed companies:*Tsim Sha Tsui Properties Limited*Sino Land Company Limited...

     - Hong Kong SAR, China
  • Sugar, Alan
  • Solidere
    Solidere
    Solidere s.a.l. is a Lebanese joint-stock company in charge of planning and redeveloping Beirut Central District following the conclusion, in 1990, of the country’s devastating civil war...

  • Speyer, Jerry
    Jerry Speyer
    Jerry I. Speyer is an American real estate tycoon. He is one of two founding partners of the prominent New York real estate company Tishman Speyer...

  • Sun Hung Kai Properties - Hong Kong SAR, China
  • Swire Properties
    Swire Properties
    Swire Properties Limited is a property developer in Hong Kong and mainland China, with its headquarters in Hong Kong. The company is a subsidiary of publicly-listed Swire Pacific...

     - Hong Kong SAR, China
  • Tishman, Robert
    Robert Tishman
    Robert Valentine Tishman was an American real estate developer who had been head of the family-owned firm Tishman Realty and Construction until it was disestablished in 1977, and was one of the two founding partners of Tishman Speyer, which was formed in 1978 and became one of the largest owners...

  • Crow, Trammell
    Trammell Crow
    F. Trammell Crow was an American real estate developer. Crow is credited for creating several famous real estate projects, including Dallas Market Center, Peachtree Center , and San Francisco's Embarcadero Center.-Biography:Crow was born in Dallas, Texas...

  • Triguboff, Harry
    Harry Triguboff
    Harry Oscar Triguboff AO is an Australian property developer and strong proponent of population growth in Australia to a hundred million. Also known as "High-Rise Harry" -Early life:...

  • Wynn, Steve - Las Vegas Casino Developer
  • Trump, Donald
    Donald Trump
    Donald John Trump, Sr. is an American business magnate, television personality and author. He is the chairman and president of The Trump Organization and the founder of Trump Entertainment Resorts. Trump's extravagant lifestyle, outspoken manner and role on the NBC reality show The Apprentice have...

     - New York, New Jersey, North Eastern US
  • Taubman, Alfred
  • Vartan, John
    John Vartan
    John Vartan was an American entrepreneur and a noted educational philanthropist in the Harrisburg area in which he lived.-Business career:...

  • Vanke - China

Top real estate development companies by market capitalization

The top companies by market capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...

 in the real estate development industry, as of 29 April 2009, are given below.
Company Exchange Ticker Cap ($)
DLF Universal BSE DLF 2.24B
Inversiones y Representaciones Sociedad Anónima (IRSA)
Inversiones y Representaciones Sociedad Anónima (IRSA)
Inversiones y Representaciones Sociedad Anónima is the leading real estate development firm in Argentina.-Overview:IRSA was founded as a realty by Isaac Elsztain, an Argentine Jewish immigrant, in 1943. The small independent realty, based in Buenos Aires, grew slowly and, as late as 1991, had a...

NYSE IRS 226M
Consolidated-Tomoka Land  AMEX CTO 199M
AMREP NYSE AXR 108M
Stratus Properties NASDQA STRS 74M
Bluegreen NYSE BXG 67M
ZipRealty
ZipRealty
ZipRealty, Inc. is a U.S. real estate company with licensed agents Founded in 1999, the company operates in 35 major markets in 22 states and the District of Columbia. It is incorporated in Delaware and headquartered in Emeryville, California. The company went public in 2004.-See also:*National...

NASDQA ZIPR 56M


For historic comparison, by 1963, at the time of going public on the American Stock Exchange, one of Louis Lesser
Louis Lesser
Louis Lesser is an American business magnate. He received frequent press coverage in the 1950s and 1960s for his ability to earn money and for his various business operations. He sold the Taj Mahal to New York real estate developer Donald Trump...

's companies, Louis Lesser Enterprises, Inc., had developed $ (adjusted for inflation) worth of real estate in California, Colorado, Nevada, Washington, Arizona, Illinois, Indiana, Michigan, and Hawaii, which does not include his international development, nor development by his other companies and partnerships.
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