February 17, 2022

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What is project management in real estate? Types and Importance of it.

Types of real estate development projects

Project management is the setting up of all the components of a project together to work in synchronization. There are the following types of real estate development projects:

Brownfield

Brownfield is the already used land that is to be upgraded. The lands can be areas of industrial or commercial facilities. Benefits of brown field are:

  • With the existing infrastructure, the cost of upgrading is lower than starting from scratch. This cost may vary from project to project, and occupancy can happen much faster.
  • Because of the existing infrastructure, planning permission is already in place. The upgrade of the brown field kick-started.

Greenfield

Greenfield is the undeveloped land in a city or rural area. The land can either be used for agriculture, landscape design, or left to evolve naturally. It can be open fields, urban lots, or restricted closed properties. Its advantages are:

 

  • Greenfield sites are vacant. They will have the option to give adaptability to the structure and activity of any new turns of events.
  • Simple to agree to ecological principles (contrasting with brown field)

Sub-division

The subdivision is a property investment strategy. It divides up a single piece of land into smaller lots. The smaller pieces can be developed (buildings on them) and sold separately. Partnership with real estate investors will increase the profit rate of subdivision projects. As a result, you will gain the maximum return on investment and the following benefits:

  • The investor is buying lands at a high price. And he is selling two or smaller properties/pieces of land at a higher per sqm price.
  • A managed subdivision project can increase the capital value of the lands.
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Industrial

It is used for manufacturing and production. Some of its benefits are:

  • Cheaper land & longer/better tenant
  • Construction costs may be lower (open-air factory vs high rise construction)

It also has some disadvantages that are:

  • Slow-moving project
  • Might involve cleanup cost
  • Often developers need to find a client and build to suit their requirements.

Residential

It is used for living purposes and has the following advantages:

  • Home is the basic necessity
  • Inflation and deflation hedge
  • Easy to sell under typical market situations
  • Easy to do comparable on sales projections

Its drawback is:

  • Creating at an inappropriate time or in a wrong territory will be exorbitant, and deals will slow down

Commercial

Buildings developed to make a profit, either from a capital increase or rental income. The businesses that rent in commercial real estate gain much profit. Thus, a developer/investor usually owns the building and collects rent from each company that operates there. Its advantages are:

  • Higher rent per sq ft than residential assets or apartments
  • Stable money flow.
  • Since business assets are divided into smaller units for rental/lease purposes, the vacancy risk is spread over many units.
  • Given the massive size of investments required, it takes deeper pockets to invest in commercial real estate projects such as workplace buildings and shopping centers.
  • Long-term capital appreciation
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Repositioning and re-development

Repositioning and redevelopment projects offer several benefits. A number of advantages are given below:

  • The existing building will save money on construction costs
  • Can be much quicker to renovate/develop
  • Can have heritage and historical worth and elements
  • Larger floor plates
  • Unique features and story
  • Community worth add
  • Generate income/taxes in idle buildings
  • Generate jobs
  • Increase the land values of encompassing real estate
  • Increased sales price /sqm
  • Government support

Importance of project management in the real estate industry

In the real estate industry, project management has a vital role. Large or small, high budget or low budget, real estate projects have many moving parts. A project management process is the best way to keep up the timely and cost-effective fulfillment of a land venture.

Project management in real estate is not easy. It is dependent on having the right software, tools, and team on your side. Involved with multiple steps, lots of money, and the need to get input from many stakeholders, the success of your real estate plan hinges on your project manager.

Here are three reasons why real estate project management is important:

Communication

Land ventures host to adjust contributions from numerous gatherings. They may even need to represent open remark periods and genuine effort. The venture director’s primary responsibility is to assemble all data sources—gauging each voice similarly—and make a durable tale about the undertaking.

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Oversight

Tracking and reporting are critical for real estate projects. Not only does it help with reducing issues, but it also keeps the project on track and within scope. Status reports at regular intervals are crucial to making sure there is continuous oversight on the real estate project.

Risk reduction

For real estate projects, there is always a risk of going over budget, scope, or time. Also, real estate projects may expose companies to risk when it comes to partnering with other businesses. The project manager supervises in managing project cost. He does this by securing project insurance, overseeing contract creation, and more.


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