Global Real Estate Development Industry
The global real estate development industry involves a range of activities relating to property renovation, re-lease and the sale of land. Developers are not themselves constructors though they do avail of builders’ services in the course of their real estate projects.
Developers buy land to sell it, but first move through a number of phases such as marketing the land, designing and putting into practice a property project for the land, including acquiring public approval and financing. Apart from builders, developers also collaborate with other necessary agents such as engineers, inspectors, surveyors, city planners, contractors, architects and leasing agents.
Developers not only acquire new land, or speculative development, but also make changes to existing structures to fulfill any functions called for by potential buyers. They can also prepare land for other purposes, such as mining. Some development teams encompass various talents (like architects and engineers), while other outfits can be much smaller and contract out work to external companies to offer services they may not have in-house. The developer continues to coordinate the real estate project and activities entailed throughout the duration of the project, calling on various professional services as needed.
Apart from the more physical work, developers also liaise with agents that are not directly related to building, such as government officials, legal agents and environmental consultants.
Regional Market Share
- The US land development sector encompasses more than 26,000 outfits, employing around 72,000 people, according to IBISWorld. There has been a sharp decline in demand due to the subprime crisis, with banks, consumers, builders and investors all more reluctant to undertake real estate projects. Many real estate development projects have been cancelled or postponed, cutting into industry margins. Industry revenue has been forecast to fall by a yearly rate in excess of 7% to reach less than $19 billion before the end of 2012. Residential construction is one downstream market that accounts for around 65% of overall land development industry revenue. Declining revenue in this sector due to the recession has caused demand for land development services to suffer. Industrial construction, however, fared better during the recession, sheltering the industry somewhat. Over the coming years, rising exports will drive demand for manufacturing space. This along with recovery in construction markets will have a positive impact on land development industry performance.
- Most of China’s real estate investment is focused on certain developed areas such as in the east and the north of the country, with the north in particular accounting for almost 36% of development, reports Research in China. Market growth is driven by the country’s large population, which fuels real estate investment.
- Saudi Arabia’s real estate development industry continues to witness strong growth. Much of its real estate activity is concentrated in urban centers such as Al Khobar, Riyadh, Jeddah, Dammam, Muscat and Makkah, reports MindPower Solutions. Factors contributing to industry performance include the growing population’s demand for residential properties. There is a trend among the young domestic population to purchase residential property, rather than rent due to higher levels of disposable income. Growth in the office market segment, however, continues to feel the negative effects of the economic recession due to reluctance of foreign outfits to expand their activities abroad. The industry’s retail segment has also suffered due to a falling-off in numbers of tourists visiting the region to shop.
Players from various sectors (such as banks, investors and developers) are all tackling significant obstacles in the real estate development market. Consumers and commercial outfits both continue to postpone property development projects, waiting for a better level of economic recovery.
Real estate development companies are obliged to show greater flexibility concerning projects that could be interrupted, converting intended projects into other more promising projects. Government initiatives will play a role in shaping the industry over the coming years in terms of construction, buying incentives and favorable tax schemes.
Leading Industry Associations