What Are Capital Markets and How do They Work?
Real Estate competes with other investments on a risk/return basis.
Debt ranges from 0-100%, and normally 50-80%; equity ranges from 20-50%.
Debt is repaid from project proceeds before equity.
Four Types of Real Estate Investments
Real Estate Development Drivers
Housing (retail): demolitions, population growth, reduction of household size, shifting of household type toward non-family, increase proportion of middle-age and seniors, etc.
Commercial and Industrial: employment growth, etc.
increase of land prices and supplies, increase of material prices, reduction of mortgage rates, increase of labor costs, etc.
Cultural values and attitudes, infrastructure, etc.
High housing vacancy
Rapid growth of seniors
Flat per capita income growth
Potential post-recession surges in employment and housing starts
Fastest growth in medical, office and educational occupations
Job leadership by small establishments
Strong inflation in steel prices
“[…] developers must understand the users and their needs. Without users, buildings – no matter how aesthetically pleasing or how theoretically functional – have no value.”
What is Real Estate Development/Land Development?
Real estate development is the continual reconfiguration of the built environment to meet society’s needs.
The 8 Stages Non-linear Process of Real Estate Development
Inception of an Idea: market research, problem solving, creating
Refinement of the Idea: site selection, project design
Feasibility: public and private review
Contract Negotiation: contractors, tenants, regulators
Formal Commitment: contracts and entitlements
Completion and Formal Opening: marketing , sales
Property, Asset, and Portfolio Management” tenants and technology
What is it?
Responsible Property Investing (RPI) is property investment or management strategies that maximizes the positive and minimizes the negative social and environmental effects of property investing, consistent with fiduciary responsibilities.
10 elements of RPI that help buildings perform better:
Public transport oriented developments
Urban revitalization and adaptability
Health and safety
Social equity and community development