Joseph Armato | Definition of Real Estate Development

Definition of Real Estate Development

Real estate development, often known as property development, is a business process that includes everything from the purchase of undeveloped land through the sale of completed land or parcels to third parties. It also includes the renovation and release of existing buildings.

According to Joseph Armato, Real estate development is the ongoing reorganization of the built environment to accommodate different societal space needs. This indicates that simply finishing a building’s physical construction is merely one stage of development. It has to be rearranged or reconfigured. It is important to keep rearranging or reconfiguring.

Groundup Development

The construction of a real estate asset from the ground up, from site preparation through a complicated building, is known as groundup development. A ground project involves building a structure entirely from scratch, which comprises creating new walls, foundations, footings, etc. at a brand-new place. Either bare, undeveloped terrain or the total demolition of every building already in place serves as the starting point.

Ground up development refers to both the process of developing or building on the vacant ground by constructing new buildings with a fresh design and plan as well as the method of renting or purchasing undeveloped vacant land and erecting new buildings on it. One of the two main categories of real estate construction projects is this one.

Renovation Redevelopment

Renovation or redevelopment is the process of rebuilding parts of a structure while leaving most or all of the structural components untouched. Nevertheless, a renovation project doesn’t start from scratch. Instead, a building’s structural components are kept untouched while some of its parts are destroyed and reconstructed.

Redevelopment/renovation is the process of developing and modernizing an existing structure or property. It entails demolishing (50%) a portion of the old building structures and redeveloping the existing structure or property in accordance with regulations and previous development or building permits, so there is no need to waste time waiting for these approvals.

Nature of Real Estate Development

As per Joseph Armato Real estate development, often known as property development, is a business activity that involves making improvements to real estate before renting out or selling the upgraded or developed structures to potential buyers or renters. All of these processes are coordinated by real estate developers, who turn concepts from paper into tangible assets.

Although many developers also oversee the construction process, real estate development is distinct from construction. It is a commercial procedure or entrepreneur concept that entails the purchase or lease of undeveloped land, investment in those lands or properties, and ultimately sailing or renting those assets to others.

Advantages of Renovation Project

The main benefit of this development strategy is the absence of building permit costs and procedures.

Since much of the structural work is likely to have been finished before the project, renovations frequently prove to be the more cost-effective option. When opposed to new construction projects, remodeling projects typically have an easier time obtaining building permits. Additionally, a project can frequently access ideal locations through a renovation of an existing structure that wouldn’t be possible for new ground-up construction projects.

The Supply Concepts

A basic economic notion known as supply refers to the entire amount of a particular commodity or service that is made available to consumers. Supply can refer to the quantity offered at a certain price or, if shown on a graph, the quantity offered over a range of prices.

The main factors that alter the supply curve in real estate, which is influenced by current real estate prices, are the costs of goods and services, which determine suppliers’ incentives.

Disadvantage of Renovation Project

Joseph Armato says The main drawback of remodeling projects is that they inevitably result in less flexibility when it comes to building construction because the development process is so heavily dependent on the pre-existing building plan and permission.

General contractors must work within the confines of the current remodeling framework, and this occasionally leads to a building that isn’t quite suitable for the intended use. Although a renovation often costs less money than a new development, it is still the budget winner.