How Property Development Works
Real estate development is a multi-phase process that is complicated, lengthy and if not managed well, risky. It can take years to bring a project from the initial planning stage, through construction, and all the way to final completion, and there are plenty of obstacles that can pop up along the way. However, development projects also can be highly profitable investment opportunities.
UGC Projects leverages its own vast experience in real estate development and its trusted network of highly qualified, “Best of Bread” real estate development professionals to help investors gain access to an asset class which is known to generate exceptional investment performance, if managed well.
By definition, real estate development provides the opportunity to deliver a product that does not currently exist into a market, often providing the fresh new supply to satisfy pent up market demand. When executed well, this aspect of a development project can translate into a runaway success story, something that isn’t nearly as possible with existing real estate assets.
UGC Projects allows investors to more confidently assess the risks associated with the development, construction and sales process of the project by bringing together all of the key elements integral to completing a successful project, so that it can open up opportunities for its clients to profit from opportunities rarely made available to the everyday investor.
Phase 1: Pre-Development/Planning
The first phase of a project focuses on due diligence, research and permitting. It is often the most variable in duration. Investing at this stage carries the greatest and most varied risks because there are many unknowns. Some of the common steps in this phase include:
> Market analysis and feasibility studies
> Land acquisition or securing option rights to purchase land
> Environmental assessments
> Surveys
> Site plans, development plans, and building plans
> Permitting
> Some infrastructure improvements
> Arranging debt and equity funding
Phase 2: Land works/Construction
The middle stage involves constructing the improvements. Since the pre-development tasks have been completed, the project risks at this stage are greatly reduced, if not completely eliminated. Some of the common steps in this stage include:
> Land works and construction of the site
> Project marketing
> Construction finance
> Pre-leasing/Pre-selling
> Arranging for a property manager, if required
Phase 3: Operation
The final phase of the development process, operation, is the first phase of the building’s life. While the pre-development and construction risks may be removed by this point, obtaining tenants or ensuring the project is completely sold out can still be a risk. Some activities during the final phase include:
> Ongoing marketing and leasing
> Finding buyers, if not done earlier
> Determining a holding strategy, if not selling
> Ramping up property management
