Expert Insights: Your Top 9 Property Development FAQs Answered

Property development has become a lucrative venture in the last few years. It is an excellent way of creating wealth, given its tax advantages and excellent returns.

You’ll rarely go wrong with property development if you follow the proper procedure and comply with all council laws and building regulations.

However, property development has many complications that could cause one to lose money instead of making it. A developer also has to comply with a tonne of council regulations.

Before stepping into the real estate realm, it’s essential to gather a wealth of information.

Today, we’ll help get you started by providing detailed responses to the frequently asked property development questions. 

#1: What is property development?

Property development is the art and science of identifying opportunities, creating value, and generating significant financial returns through the transformation of land or existing buildings.

It could involve purchasing a strategically located piece of land, constructing buildings on it, and selling them to make profits. It could also include buying buildings, renovating or remodelling them, and selling them to make a profit.Alternatively, it could involve purchasing land or an existing building and improving it so you can move in.

Property development involves a range of activities, including market research, site acquisition, planning and design, financing, construction and project management, marketing, and sales or leasing. At every stage, a developer must exercise keen judgement and decision-making skills, balancing the costs and risks of the project with the potential returns on investment.

At its core, property development is about creating something from nothing, and turning a piece of land or an existing building into a valuable asset that generates significant financial returns. It requires a combination of vision, experience, and a relentless focus on delivering results, and for those who are able to master the art of property development, the rewards can be significant.

#2: What essential skills should every successful property developer have?

There are several essential skills that every successful property developer should have. These skills are crucial to identifying opportunities, creating value, and generating significant financial returns through property development.

In my other article titled “7 Essential Skills Every Successful Property Developer Needs,” I provide a detailed overview of these skills and explain why they are critical for success in the property development industry. These skills include:

• Organisation Skills
• Understanding Construction and Design Principles
• Decision-Making Skills
• Negotiation and Communication Skills
• Knowledge of Real Estate Market Trends and Regulations
• Financial and Business Skills
• Problem-Solving Skills

By developing these skills and applying them to real estate development projects, successful property developers are able to create value and generate significant financial returns. Whether you are a seasoned developer or just starting out in the industry, it is essential to master these skills in order to succeed in the highly competitive world of property development.

#3: Is property development profitable?

Property development can be an extremely profitable industry when done correctly. However, it is important to note that profitability in property development is not guaranteed, and there are risks and challenges associated with every project.

To be profitable in property development, a developer must be able to identify and capitalise on opportunities, manage costs and risks, and create value that exceeds the investment. This requires a combination of market research and analysis, financial management and analysis, project management, negotiation and communication skills, creativity and problem-solving, attention to detail, and risk management and mitigation.

It is also important to note that the profitability of a development project will depend on a number of factors, including the location and condition of the property, the level of demand in the market, the availability of financing, and the skill and experience of the developer.

That being said, with the right combination of skills, experience, and market knowledge, property development can be an extremely profitable industry. Successful developers are able to create value by identifying opportunities, managing costs and risks, and delivering high-quality projects that meet the needs of investors, end-users, and the wider community.

So, in short, yes, property development can be profitable, but it requires hard work, skill, and expertise to achieve success in this competitive industry.

#4: How to make money in property development?

Property developers make money in a number of ways throughout the development process.

One of the primary ways that property developers make money is through buying and selling real estate. By identifying undervalued properties, improving them through renovations or new construction, and then selling them for a profit, developers can realise significant returns on their investment.

Developers can also make money through the leasing of properties they have developed, such as residential or commercial buildings. By renting out properties to tenants, developers can generate a steady stream of income over time, while also benefiting from any appreciation in the value of the property.

Finally, some developers make money by partnering with other investors or developers on development projects. By pooling resources and expertise, developers can share the risks and rewards of a project, while also leveraging each other’s strengths to create more value and generate greater returns.

#5: How long does a typical property development project take to complete?

Depending on the type of development, it will take about a year to develop a property in Victoria.

Any development that requires planning generally takes longer to complete. You need to allow at least 3-6 months to acquire the planning permit and a few more weeks to draft construction documents before you are issued a building permit. The construction period depends on your project’s complexity but typically takes 6-12 months.

 Remember that your property development journey does not end when you complete the construction. The builder is bound by a defects liability period that lasts for a minimum of 12 months. Any general structural or water ingress issues will usually surface during this period.

As the property owner, ensure you transfer a defect-free building to your buyer. We recommend that you have an experienced project manager or contract administrator to monitor this process and negotiate with the builder on your behalf.

#6: What is the difference between property development and property investment?

Property development and property investment are two distinct approaches to generating returns in the real estate industry.

Property development is an active approach to making money from real estate, as it involves identifying opportunities, managing costs and risks, and delivering high-quality projects that meet the needs of investors, end-users, and the wider community. Property developers are responsible for managing the entire process from start to finish, including securing financing, obtaining approvals and permits, managing construction, and marketing and selling the finished product. This requires a hands-on approach and significant expertise in many areas of real estate development.

In contrast, property investment is a passive approach to making money from real estate. Property investors purchase already developed or developing properties with the aim of generating a return on investment through rental income or capital appreciation. They do not typically play an active role in the development process, but instead focus on managing their properties and optimising their returns through strategies such as rent increases, property improvements, or the timing of sales.

Both approaches have their own unique advantages and challenges, and the choice of which approach to take will depend on the individual’s investment goals, risk tolerance, and expertise in real estate.

#7: What is the typical property development process?

The typical process of property development involves several key stages that must be carefully planned and executed to ensure a successful outcome.

The first stage involves identifying a suitable site for development and conducting a feasibility study to determine the project’s potential and viability. This includes assessing the site’s zoning, size, location, market demand, and financial feasibility.

Next, the developer must secure financing for the project, either through their own capital or by seeking external funding from banks or other investors. It is crucial to ensure that the financing is sufficient to cover all project costs, including land acquisition, design, construction, marketing, and contingencies.

Once financing is secured, the design process can begin. This involves creating a detailed design and development plan that meets the requirements of all stakeholders, including the developer, investors, and local authorities. The design must also comply with all building codes, zoning regulations, and environmental laws.

After the design is completed, the developer can move on to the construction phase, which involves the physical construction of the project. This stage includes procuring contractors, obtaining building permits, and managing the construction process to ensure that the project is completed on time, within budget, and to the highest quality standards.

Once construction is complete, the developer can market and sell or lease the developed property to realise a return on investment.

Overall, the typical process of property development is complex and requires careful planning and execution. By working with a team of experienced professionals and following best practices, property developers can navigate the process and achieve success in the industry.

#8: Who are the professionals essential to the success of property development?

Building the right property development team is essential to the success of any project. The following are some of the key consultants that should be included in a property development team, along with a brief description of their roles:

Architect

An architect is responsible for designing the building or structure that is being developed. They work closely with the developer to create a design that meets the needs and desires of the client, while also adhering to local zoning and building regulations. An experienced architect can also act as your project manager to coordinate and lead the building’s design and construction.

Builder

A builder is responsible for managing the construction process and overseeing the work of subcontractors and tradespeople.

Civil Engineer

A civil engineer is responsible for the design and construction of the infrastructure and site works associated with the development, such as site fall and levels, roads, stormwater drainage, and utilities.

Structural Engineer

A structural engineer is responsible for the design and analysis of the building or structure, ensuring that it is safe, stable, and able to withstand environmental stresses.

Hydraulic Engineer

A hydraulic engineer is responsible for the design and analysis of water management systems within the building or site, including stormwater drainage, water supply, gas supply, and wastewater management.

Electrical Engineer

An electrical engineer is responsible for the design and installation of electrical systems within the building, including lighting, power, and communications.

Mechanical Engineer

A mechanical engineer is responsible for the design and installation of mechanical systems within the building, such as heating, ventilation, and air conditioning (HVAC) systems.

Traffic Engineer

A traffic engineer is responsible for analysing and designing traffic flow around the site, including parking and access to the site.

Energy Engineer

An energy engineer is responsible for analysing and designing energy management systems within the building or site, including the use of renewable energy sources and energy efficiency measures.

Lawyer / Conveyancer

A legal professional is responsible for ensuring that all legal requirements are met during the development process. They review contracts, ensure compliance with zoning and building codes, and facilitate the transfer of property ownership.

Building Surveyors

A building surveyor’s responsibilities include conducting site inspections to ensure that the building is being constructed according to the approved plans and specifications, reviewing building plans and documents, issuing building permit and occupancy permit, and conducting inspections at key stages of the construction process.

Land Surveyor

A land surveyor is responsible for conducting surveys of the site to determine its boundaries, topography, and other physical characteristics. This information is essential for creating accurate site plans and ensuring that the development is compliant with zoning and other regulations.

Real Estate Agent

A real estate agent can provide valuable insights into the local real estate market, including information on pricing, demand, and market trends. They can also help to market and sell the completed property.

Town Planner

A town planner is responsible for ensuring that the development is compliant with local planning regulations and policies. They can provide advice on the most appropriate land use, density, and building design for the site, and help to obtain necessary permits and approvals.

Arborist

An arborist is responsible for assessing the health and viability of trees on the site, and making recommendations for their preservation or removal. They can also provide advice on landscaping and green infrastructure.

Managing a team of diverse professionals, each with their unique expertise and perspective, can be a challenging and overwhelming task. However, one of the critical services that an architect provides is to coordinate these professionals. 

At SQM Architects, we act as the central point of communication between the developer and the various consultants, ensuring that everyone is on the same page and working towards a common goal. This helps to minimise confusion and miscommunication, and it ensures that the development proceeds smoothly and efficiently.

By taking on this coordination role, we make the property developer’s job easier, freeing up their time to focus on other critical tasks. This allows the developer to have peace of mind, knowing that their project is in good hands, and that they have a team of professionals working together to achieve the best possible outcome.

#9: How to get into property development?

To get started in property development, it is vital to work with a team of experienced professionals who can guide you through the process and help you achieve their goals. 

SQM Architects can provide the necessary expertise and guidance to make property development dreams a reality. With our proven track record of success and expert guidance, we can help you achieve your property development goals and make the most out of your investments. Contact us today to begin your journey in property development.