Who is a developer and what does a development company do

Recently, many new words have appeared, the meaning of which is far from always immediately clear. One of these is a development and development company. You can understand from advertising that they are associated with a construction site, but why not call them a builder and a construction company? And because construction is only part of the tasks that developers perform.

What is development, what does a developer do

The word "development" itself is a transliteration of the English development, the most common translation of which is development (growth).

Development Is an entrepreneurial activity associated with the creation of a real estate object, reconstruction or alteration of an existing building or land plot, leading to an increase in their value.

Accordingly, the goal of the development company is to increase the value of real estate and its profitable sale.

Stages of a development project

How, then, does a developer differ from a builder? The fact that the developer is only implementing the project is directly carrying out construction work, possibly with the involvement of funds. While development assumes a full cycle - from the idea to the final implementation. That is, the development company is engaged in:

• Developing an idea. It can be a commercial object - an office building, a shopping mall, etc. There may be a new block of houses, both private and multi-storey.
• Analysis of the situation. It is calculated to what extent this idea can be liquid, the payback period, possible profits and the degree of risk. Based on these data, a decision is made on the feasibility of the project.
• Searching for a construction site (buildings for reconstruction), acquiring rights.
• By creating a project.
• Searching for a contractor for the construction or reconstruction of the facility.
• Monitoring the construction process.
• Looking for buyers or tenants.
• Object management.

The standard structure of a development company, according to which it is clear that you have to perform diverse tasks

This is a development project. In short, they came up with it, evaluated the effectiveness, found a place and implemented it. It turns out that a development company is an organization that is fully responsible for the entire construction cycle - from the idea to its final implementation. The developer only builds, he can be hired by a development company specifically for construction. That is, it only performs part of the project.

As you can imagine, the full implementation of the project is a big risk. Such companies finance projects either themselves or with the help of funds. Equity construction is possible. But they also invest their money, and they will receive profit only at the stage of implementation - from sale and lease.

Types and features of development activities

If we talk about the tasks of development in general, this is an increase in the value of a building, a complex of buildings, a plot of land. One of the directions is reconstruction. This is a development in the secondary market. Often the activity is associated with a change in the purpose of the building. An old building or group is bought, completely rebuilt, then either sold or operated by the company itself.

If we talk about construction from scratch, then the task of the development company in this case is to build the most liquid building. In any case, it is necessary to be aware of the market and its development trends. Knowledge of construction technologies, the presence of experienced marketers and managers is a must. Often a development project is the construction of not one building, but a whole group or village. Then the project includes the creation of infrastructure.In general, the structure of the company can be different - for the tasks that it undertakes to implement.

The plan includes not only residential or industrial buildings, but also infrastructure, arrangement, etc.

There are two types of development companies:

• Fee development (fee development).
• Speculative development (speculative development).

If the organization works on the principle of Fee-development, it implements projects for the customer. In this case, the risks of the development company are less, since the funds are usually invested by the customer. The customer's interest in this case is that developers have established relationships with professionals to implement any part of the project. They either have their own staff (very rarely), or delegate a specific task to a specialized company. But they themselves have specialists who monitor the quality of work. In this regard, the risks are less, the profit on investments is higher.

The type of company is also important

Speculative development companies build for themselves. They are not going to sell the property, but leave it under management. In this case, the interest in the high-quality implementation of the project is higher - after all, you will have to solve all operational problems yourself. But the risks are higher, respectively, the cost per square meter too. But the result is likely to be better.

Land development

Land development or Land development (from the English Land - land) is a type of activity that involves increasing the value of a land plot. Usually, this activity is associated with a change in the purpose of the site, its division into smaller areas, the provision of communications with the subsequent sale for building. Moreover, most often, such plots are bought by construction developers for the implementation of their projects. In short, this is the scheme.

As a result of the actions of the land developer, an ordinary land plot turns into a site ready for the start of construction, which is important with the formalized documents. It is only necessary to register the change of the copyright holder.

Land development is a separate category of enterprises in the construction market

Why is this type of activity separated into a separate group? Because it is a long and complicated process. For example, the procedure for changing appointments can take more than one year. At this stage, you need to collect up to 250 signatures. The amount of payments (official and unofficial) is also impressive. This type of activity is considered the most risky. Since it is necessary to have an idea not only about market trends, but also about the development strategy of the region, the solvency of future customers, planned changes in the regulatory and legislative framework and a lot of things that are difficult to predict.

When choosing a plot of land for its activities, a development company first determines who may be interested in this project - a group of potential consumers is determined. Accordingly, the level of landscape design, buildings and infrastructure is planned strictly according to the class of clients.

At the same time, a plan is being considered to attract investors' funds, since the company's own invested funds usually make up 20-30% of the total amount. Close attention is paid to the ecological state of the site under consideration, the possibility and prospects for the development of transport links with neighboring urban areas and the center.

How to choose a developer

The reliability of a development company is determined by the number of successfully completed projects. This is the main measure of success and reliability. It is clear that these are usually large and "old" players who have been on the market for many years. This is precisely the complexity of the development of this market segment: it is very difficult for young organizations to enter the business. In addition to the fact that a lot of capital is required, well-established contacts, a staff of specialists and potential customers are needed.At the same time, the implementation of finished projects may not be so successful not because of the poor quality of work, but because of the lack of authority and name, and a low level of trust.

Experience is important, the presence of completed projects

Each region has its own rating of development companies. Large and well-known by everyone, they can simultaneously conduct several large projects, since, thanks to their name, they easily attract investors' funds. If you are planning to invest in a facility under construction, it is just such a company - with a name, a large number of built and commissioned facilities - that is worth looking for.

In big cities, there may be several such development companies or projects. To choose, compare the attractiveness of the object for yourself. In this case, it is necessary to evaluate not only in terms of the necessary funds, but also in terms of a possible increase in the value of your "piece" of real estate. If other projects are being implemented nearby or nearby, most likely, the cost will grow rapidly, as well as improved communication with other districts and the center, other cities.

What state are already handed over objects, how convenient they are - is also important

And one more tip: do not be lazy, go to the already commissioned objects of the selected companies. Walk around, see how everything works, is it convenient or not, whether you like what you see or not. Pay attention to the state of the building a few years after delivery. The point is not only in the management company, but also in the quality of the project, in the observance of technologies and the use of normal materials. In general, there are many components of success and authority. Based only on promises and brochures - putting your money at unnecessary risk. After evaluating the results of the work, it is easier to make a decision. And, more importantly, to be more confident in the results, and that costs a lot.