Friday, October 11, 2019

A typical real estate project development process

Author: Sachin Gupta | Find me on Twitter

Once the land development process has been completed successfully, a developer will focus his/her energies on the project development process. Developing and delivering a real estate project successfully is challenging and it lasts for several years passing through various phases. Primarily any real estate project can be divided into 5 phases:

Phase I – Land acquisition
The details about land acquisition process can be found in our earlier post of land development process.

Phase II – Construction
Construction phase requires applying for license (permitting), and project development.

  • Permitting/Licensing:

The permitting process usually begins with an application which identifies the site, its location, and a preliminary design of the improvements to be constructed. This application is then used by public officials to verify compliance with its current zoning classification. If it complies, the permit is granted and the construction of the project may commence subject to building codes and inspections. If the permit is denied, the applicant will usually clarify or amend the application and will ask the city planning staff/director to review it again.

  • Preliminary checklist – Project development:

This checklist is usually the first step that a developer reviews when evaluating a site for possible development.

    1. Allowable uses per zoning classification.
    2. Minimum lot size per zoning classification.
    3. Maximum floor to area ratio (FAR).
    4. Building bulk/density limits.
    5. Setback/building line.
    6. Building height limits.
    7. Building footprint/envelope.
    8. Parking ratios.

  • Important terms/project development:
    1. Setback/building line – requirement to construct building a specified number of feet (setback) from the right-of-way line or other landmark.
    2. Right-of-way line – area designated for a public street or alley that is dedicated for traffic, public use, utilities, etc.
    3. Building related terms:
          • Footprint – it is the shape or outline of the primary building slab or foundation as it will be constructed on the site.
            • Envelope – the total outside perimeter of a structure, including footprints and any exterior patios, mall ways, landscaping, etc.
              • Facade – the exterior, usually the main entrance of a structure
                • Bulk – a three dimensional space within which height, width, footprint, and number of structures/elevations/shapes are viewed in total relative to the land area upon which it will sit to determine land use intensity.
                  • Building codes – refer to required materials and methods used to construct improvements within a jurisdiction.
                    • Permit- document executed by the director of planning authorizing the construction, restoration, alteration, repair, etc., of a structure and acknowledging that it conforms to requirements under the applicable zoning ordinance.
                1. Floor to area ratio (FAR) – it is usually calculated as gross building area divided by square footage of land area.
                2. Height restrictions – used to limit the vertical height of a structure to be constructed.
                3. Allowable use – user activities permitted in a zoning classification
                4. Impact fees – charged by public entities to cover added public sector expenses expected to be caused by the development such as traffic control, drainage, etc.
                5. Incentive zoning – used by city planners to accomplish community goals simultaneously with private sector development.
                6. Inclusion zoning – part of a zoning ordinance that requires that a specified type of development be included in order to obtain permit for that site.
                7. Minimum lot size – per zoning classification
                8. Parking ratio – required number of parking spaces per sq. ft of gross building space or per number of apartment units.
                9. Site plans – drawing done to scale depicting the placement relative to other requirements
                10. Traffic counts – number of vehicle trips per hour past a specific site.
                11. Encroachment – occurs when the construction of improvements extends over a property line on to an adjacent property.
                12. Property tax abatement – forgiveness of taxes for a specified number of years.
                13. Land to value ratio – calculated as rupee value of land to total project value (including land) anticipated upon completion of project.

              Phase III – Completion and occupancy

              There are certain risks in any real estate project development. Once the construction has been completed, there is an additional risk of selling and handing over the project to clients or bringing in tenants in case of rental property. Risk begins with land acquisition and increase steadily as construction commences until cash flows from the leasing phase materialize. It should be noted that factors determining the demand for type of space (such as office, retail, warehouse) being developed are critical to project risk. These factors may manifest themselves in current market indicators, such as vacancy rate levels, rent levels, or the extent of leasing commitments from the tenants.

              A very good understanding of the underlying economic base of an urban area or region is critical when assessing the viability of real estate development.  The point is that investors must examine the demand for space in terms of the characteristics of the demand by end users (tenants) in a given market. This demand in turn depends on the type of employment in the local market and the nature of the functions tenants will perform. Only by understanding the local economy and the nature of employment can developer anticipate demand accurately and produce and supply the quantity and quality of space in the proper combination to satisfy market demand.

              Phase IV – Management

              Once the property is occupied by clients/tenants, there is need for professionally managed facility management team. This team can look into the property management tasks such as maintenance, HVAC, parking management, security, civil works, housekeeping, landscaping, etc. These tasks are equally important and ascertain the long life of property and thus ensure positive rental income as well as capital appreciation. 

              Phase V – Sale
              The developer may choose to sell the property from construction phase onward as happens in residential development in India. Or he/she may choose to hold the property in case of commercial developments provided rental income from the commercial properties is significant enough to justify retention.

              Have any Questions?


              1. Developing a real estate project is no easy task. you need to work hard to complete the project ifrst and then to sell the units. it requires huge investment as well patience too. you must be ready to see the worst conditons and also come over it.

              2. Thanks for sharing this article. you can also refer Budget Apartments in Whitefieldfor more information.

              3. If you are a buyer, we could help cost and put your DLF Garden City Plots Lucknow or residential property on the market for a fast sale. Learn more about Helios developers property by searching search engine.

              4. To develop a real estate project is top task. Form starting to end its like a headache for both the owner and the developer. So a proper plan and execution of the plan is necessary to finish the project. Nice post thanks to share.
                Duplex house near by Bhubaneswar

              5. Yeah its not easy to develop any real estate project with furnished structure and facilities. Generally builders and developers has to wait to see their project developed and they have to keep patience a lot during this period. Property development is a big task for any developer like Vigneshwara Developers, Vatika, Unitech, Supertech.

              6. Thanks for your information. Here I would like to introduce most trusted Builders like Faith Inc property developers. Now providing Apartments in Bangalore

              7. David Sessford
                Enormous one blog! I have got very clear picture of the topic you shared here that’s truly amazing!

              8. wow,, this article contains the key points about the development process of real estate business.. Best plots to buy in South Bangalore MGB IRR EnclavePlots to buy in Electronic City

              9. UTC Project -Code 60 providing 1 and 2 BHK Studio Apartments, 2 and 3 BHK Studio Apartments in Noida Extension, Best Studio Apartment in Delhi NCR, Best Luxury Studio Apartment Noida

              10. Nice post, thanks for sharing. Property is one of the most expensive resources for someone. We have extensive range of IT park in central India for all size organizations. wardhaitpark is one of the biggest IT office In India.

              11. Amazing tips to give charming look to house. thanks for sharing this ideas with us.row houses in bangalore|bangalore villas - Real Estate

              12. I have got amazing things after visiting this blog. It's quite awesome.
                Residential Property in Jaipur

              13. Wonderful blog.. Thanks for sharing informative blog..
                2 BHK Apartments for Sale in Whitefield

              14. It is quite interesting blog. Thanks for the post. Giridhari Kamala Narayan is a unique collection of luxury residences in the most exclusive location of Secunderabad. properties for sale hyderabad

              15. Thanks very much for offering excellent information here.... Thanks very much and keep publishing..... I'm looking forward to your new blog.
                2 bhk flats in Chennai
                Budget flats in Chennai

              16. hi thanks for sharing your post it is so impressive

              17. Well and informative content given about Besides Mangalya Hall, Off Hindu Friends Society Road, Jogeshwari East Mumbai. Thanks for given this information here about this blog.
                2bhk Flats in Dwarka More

              18. Really Nice Blog Thanks for Sharing, Mahindra Windchimes apartments from Mahindra Lifespaces arranged at Bannerghatta Main Road Arekere Bangalore. Buy, Sell, Rent & List real estate properties in Bangalore.
                Know More Visit Below Links.
                mahindra windchimes
                mahindra lifespaces windchimes

              19. Flats available for sale within your budget.

              20. 2 and 3 bhk flats available for sale within your budget

              21. 2 and 3 bhk flats available for sale within your budget..

              22. 2 and 3 bhk flats available for sale within your budget..

              23. Thanks for sharing property list! it is good news for property Buyer. You can see more here at Affordable Flats in Jaipur

              24. Great article has shared by you. There are many real estate companies in jaipur, Rajasthan. "Suvaas" is one of the best among them. You can know more in details visit at

              25. I came across through your blog. I found the valuable information about the real estate. Thanks for sharing.
                3 BHK Flats in T Nagar

              26. Welcome to, home of the finest Mumbai escorts in Mumbai area. Our Mumbai escorts are the finest Mumbai has to offer and will provide an unforgettable Mumbai Escort experience!
                Escorts in mumbai
                Escort service in mumbai
                Mumbai escorts service
                Mumbai call girls
                Call girls in mumbai
                Escorts mumbai
                Mumbai Escorts services
                Escort service in mumbai
                Escorts mumbai
                Escorts in delhi

              27. Shreyas Enterprises home loans in Vizag

                Shreyas Enterprises Vizag is engaged in offering Home Loans to the clients In Visakhapatnam. A crew of experienced personnels
                works with enthusiasm for rendering best services

              28. Very Good List. Really helpful one. Must say it’s a unique list. I have never found these blogs before. Thanks. Your blog is very fantastic with impressive images and post also.

              29. Thank you so much for sharing this information with audience. You run a great blog. If you need any information regarding real estate visit website. I am also writing and sharing information regarding Dubai Real Estate in Dubai, United Arab Emirates, If you need any information regarding real estate visit website.

              30. This is such an informative blog, your opinion, observations and ideas are amazing and to the point. I would love to read more content like this, and I want to give one advice to you are looking for a best builders in mp then Sagar Green Hills is the ideal township for you.

              31. This Blog is really very helpful, I really Appreciate the blog content it really very useful for everyone Crescent Homes is best Home Builders in Waterloo and Home Builders in kitchener

              32. Op Chains Sector 36, Bahadurgarh. Royal Green Homes holds the promise of thousand dreams coming true with more than 25 Amenities.
                Op Chains Royal Green Homes Bahadurgarh
                Op Chains Group

                OP Chains Group
                First floor, opposite Maruti Plaza,
                Sanjay Place, Agra- 282002
                call: +91-9555-900-300

              33. Nice article.. i read your whole article which has too much information, i was looking for. thanks for sharing.

                3 BHK flats in andheri west
                4 BHK flats in andheri west

              34. Dwello is the new place to buy Homes. Buy your new home with confidence with Dwello. Dwello - The Right Address is Waiting
                Northern Lights
                Address One

              35. Hi this is good to see that you are providing such great service and you giving it for free. I love type of blogs that understand the value of providing quality information. Thanks for sharing it very useful for
                best Constructions company
                real estate ventures
                Commercial Property
                residential plots
                duplex houses
                Independent houses & villas

              36. Hii Sachin Gupta, Thanks for Information. The Information is Really helpful for my business.
                NA PLOTS NEAR PUNE
                NA PLOTS IN HINJEWADI
                PLOTS IN PUNE
                PLOTS FOR SALE IN PUNE

              37. Here I would like to introduce most trusted Builders Now providing Apartments in Bangalore.
                G: Corp Residences koramangala

                Best perporty in Bangalore

              38. Nice Blog Post… If someone wants to take a flat or apartment in your budget of 1bhk, 2bhk and 3bhk, then Kolte Patil Pune location is giving you a good real estate property.

              39. Thanks for your information. Here I suggest most trusted Builders like Faith property developers. Now providing Apartments in Bangalore and all

              40. If you want to buy the city of your dreams then Mahavir Spring Price it will be the best house for you.

              41. Thanks for sharing the article LandIndia
                Land India are experts in land transaction and land banking and provide exceptional service to those interested in acquiring residential , commercial , industrial or agriculture land

              42. It is amazing and wonderful to visit your site.Thanks for sharing this information,this is useful to me...