Real Estate Development

Real estate development is different from construction. Developer Louis Lesser 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 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 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

Main article: Real estate development education

No single path leads automatically to success in real estate development. Developers come from a variety of disciplines—real estate brokerage, mortgage banking, consulting, construction, lending, architecture, landscape architecture, legal services, 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 consultants and soils engineers to analyze a site's physical limitations and environmental impacts; surveyors and title companies to provide legal descriptions of a property; and lenders to provide financing.

Land development

Further information: 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 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 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 locations.

Notable developers

• Allen, Paul - Microsoft founder
• Bellway
• Bluegreen Communities
• Candy & Candy
• Cheung Kong Group
• Delfin Lend Lease
• DLF Universal
• Louis Dubin
• Emaar Properties
• Helmsley, Harry, deceased husband of Leona Helmsley
• Hines, Gerald D.
• IRSA, Argentina
• The Irvine Company, Donald Bren, California
• KB Homes
• Lesser, Louis - Western United States, International
• Levitt, William
• Maharishi Heaven on Earth Development
• Mirvac
• Olympia and York
• Portman, John
• The Related Companies
• Rouse, James
• Ryan Companies US, Inc.
• Sino Group
• Sugar, Alan
• Speyer, Jerry
• Sun Hung Kai Properties
• Tishman, Robert
• Crow, Trammell
• Triguboff, Harry
• Wynn, Steve - Las Vegas Casino Developer
• Trump, Donald - New York, New Jersey, North Eastern US
• Taubman, Alfred
• Vartan, John

Top real estate development companies by market capitalization

The top companies by market capitalization 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)	NYSE	IRS	226M
Consolidated-Tomoka Land	AMEX	CTO	199M
AMREP	NYSE	AXR	108M
Stratus Properties	NASDQA	STRS	74M
Bluegreen	NYSE	BXG	67M
Zip Realty	NASDQA	ZIPR	56M

For historic comparison, by 1963, at the time of going public on the American Stock Exchange, one of Louis Lesser's companies, Louis Lesser Enterprises, Inc., had developed $3,552,889,858 (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.