Real estate development

Not to be confused with Real estate investing.

Real estate development is the process of acquiring land or existing property, improving it through planning and construction, and selling or leasing for profit. It involves coordinating design, financing, approvals, construction, and marketing. Developers assume significant risk in exchange for potential returns and may oversee projects ranging from residential housing to commercial and mixed-use developments.

Developers acquire land, arrange financing, obtaining regulatory approvals, and oversee construction or renovation. Developers usually take significant financial risks in the creation or renovation of real estate and receive the greatest rewards. Typically, developers purchase a tract of land, determine the marketing of the property, develop the building program and design, obtain the necessary public approval and financing, build the structures, and rent out, manage, and ultimately sell it.

Real estate development has been criticized for contributing to urban spawl, displacement, rising housing costs, and environmental degradation. Supporters argue that development stimulates economic growth, creates jobs, and expands housing supply.

Some developers only handle part of the process. For example, some developers source a property and get the plans and permits approved before selling the property with the plans and permits to a builder at a premium price. Alternatively, a developer who is also a builder may purchase a property with the plans and permits in place so that they do not have the risk of failing to obtain planning approval and can start construction on the development immediately. Financial difficulties in development and investing differ because of leverage.

Developers work with many different counterparts along each step of this process, including architects, city planners, engineers, surveyors, inspectors, contractors, lawyers, leasing agents, etc. In the Town and Country Planning context in the United Kingdom, “development” is defined in the Town and Country Planning Act 1990 s55.

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