PROPERTY DEVELOPMENT

By :
Sr. FATIN AZIZ
Lecturer,
Centre of Studies for Estate Management,
Faculty of Architecture, Planning and Surveying,
Universiti Teknologi MARA, Shah Alam
PROPERTY DEVELOPMENT

1.0 INTRODUCTION

2.0 LECTURE OBJECTIVES

At the end of the session, students will

understand:
• the various stages in the property development
process
• Process in property development

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 PROPERTY DEVELOPMENT

Stages in Property Development

Development
• Initiation, Stage • Property
evaluation, design & management & long
costing and • Implementation & term investment
permission & construction.
approval.

Pre Development Post Development

Stage Stage

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 PROPERTY DEVELOPMENT
THE DEVELOPMENT PROCESS

1.Initiation/
Site 2.Evaluation 3.Acquisition
Identification

5.Permission/ 4.Design and

6.Commitment
approval costing

7.Implementatio 8.Let/ manage/

n/ construction dispose
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 PRE-DEVELOPMENT STAGE

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Initiation/ Site Identification
• Origin :-

4.1.1 4.1.2 4.1.3

Developer’s Landowner Government
initiatives initiatives initiatives

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• Evaluation

• The most important stage of the development

process as it guides the decision making of the
developer.

• Evaluation includes ; site investigation, market

research, and the financial appraisal of the
proposed development.

• The purpose is to ensure that the cost of the

development is reasonable, and the economic
viability of the project can be attained.

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EVALUATE
1. Site investigation
The steps that need to be undertaken are as follows :-
• site survey i.e. physical and boundary inspection
and land surveying
• ground investigation i.e. soil test and EIA
• contamination i.e. pollution and toxic waste.
• services i.e. the availability of public services
and connections
• legal investigation to verify legal conditions of
site.
• financial investigation to ensure the site is
suitable for financing.

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EVALUATE

2.Feasibility Study
To determine whether a project is financially
feasible,
to identify and recommend choices of development
and
how the project should be implemented, priced and
marketed.

Covers five perspective :-

1. Site/ locational feasibility
2. Economic feasibility
3. Market feasibility
4. Design feasibility
5. Financial feasibility

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EVALUATE

TECHNIQUES IN PROPERTY DEVELOPMENT APPRAISAL

• property development a costly investment

• relatively high risk investment.
• subject to a lot of factors and economic variables.

Methods of Financial Evaluation

• 7.1.1 Residual method

• 7.1.2 Cash flow method

• 7.1.3 Simulation method

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EVALUATE

TECHNIQUES IN PROPERTY DEVELOPMENT APPRAISAL

Measure of Profitability:
• Developer’s profit as a % of gross development
value

• Developer’s profit as a % of total development

cost

• Payback Period (Break-even analysis)

• Net Present Value (NPV)

• Internal Rate of Return (IRR)

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Acquisition
May be undertaken using the following approaches :-
• Private treaty
• Formal tender
• Public auction
• Joint venture
• Compulsory acquisition
Design and Costing

1. Architect to provide the architectural and working drawings

2. Engineers to provide the structural and mechanical and electrical drawings

3. Quantity surveyors to provide costing and bill of quantities

4. Town planners to provide the layout plan of the overall development.

5. Project manager to provide the management strategy, network analysis

Development Permission & Approval

Application and Application and

Application and
approval by for approval for
approval by Securities
conversion and development order
Commission
subdivision and building plans

Application and
Application and
approval for
approval for bridging
developer’s license
and end financing.
and advertising permit
 DEVELOPMENT STAGE

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Implementation and Construction

The second stage of development

Deals with the physical aspects of the development

Infrastructure and building construction.

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The professional team
• Architects - monitor and supervise the
contractor to ensure the contractor keep to the
design and specifications.
• Engineers - monitor the structural, mechanical
and electrical aspects of the construction
• Quantity surveyors - monitor, supervise
Architects Engineers Quantity Surveyors
materials, quantities and costing in accordance
to the building contract and to approve progress
payments to contractors.
• Project manager - ensure the construction is
done according to the scheduled plan.
• Real estate agent - promote the development in Project Manager Real Estate Agent
order to capture the market share.

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Construction Process

Site Preparation Land Surveying Infrastructural Works

Frame
Upper floors
Roof
Piling Works Foundation & sub structural Super Structure Works Stairs
External Walls
Windows, Doors
Internal Walls
Doors
(Source: BCIS)
Finishes & Fittings Services External Works

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 Post-Development Stage

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Sales and Promotion

• An essential and integral part of the development process. The disposal whether
through sale or letting

• Should be planned and thought out during the evaluation process and
implemented.

• Based on the market research undertaken during the evaluation process

• Developers policy and strategy

• to sell or to rent or both.

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Marketing
Strategy

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THANK YOU FOR
YOUR
ATTENTION