Start Your Property Development the Right Way
The start is one of the most critical phases of any property development project. Successful projects always kick off with a process of careful analysis and planning.
This blog post will help you understand what steps you need to take to get your new development project started on the best footing.
Stage 0 – Business Case and Feasibility
The first stage of any property development project is a good business case. This details what you want to achieve from the project. In other words, this is your goal for starting the project in the first place.
This stage is called Strategic Definition by the RIBA, but we prefer to call it Business Case and Feasibility.
Feasibility
Feasibility is about answering these fundamental questions:
How many units can I fit on this site?
What are the market values of my proposed units (and how do you know)?
What is the total value of your proposed development, aka the gross development value or GDV for short?
What will it cost to build the project out?
Will I get a return on my investment?
There are other factors too.
Do we have the skills or resources to manage the project? What are the risks involved? What other constraints are there?
We do a lot of work with developers at feasibility, helping them determine what can fit onto a site. This process is often carried out before they have purchased a site as part of their due diligence or it can be post-purchase.
We also look at existing buildings or sites with planning permission to assess the feasibility of putting more units onto a site to increase the overall value of the development.
Here’s an example of a site we recently looked at to assess the viability of turning some agricultural buildings into residential property. Sadly, on this occasion, our analysis enabled the developer to determine the project would not be commercially viable.
Programme
Once you’ve answered the business case questions and have a good sense of what you can fit onto a site or building, it’s time to create a detailed plan for success, called the programme.
The programme details all the steps in a project and the order in which they will occur. It’s referred to by all stakeholders in a development project and is an integral part of your project management toolkit.
Here’s a snapshot of a previously created programme for a housing development project, showing the ley steps up to the end of the planning stage. It’s essentially a very detailed GANTT chart:
Budget
Alongside the programme is your budget. One of the most critical steps in development is creating an accurate budget, ideally working with an experienced building cost consultant – also known as a quantity surveyor or QS.
If you don’t know how much your new development will cost, your forecasts could be wildly inaccurate, and you may not make your target return on investment. Worse still, you may make a loss.
Ball Park figures used in early feasibility may not be accurate and are unlikely to satisfy your stakeholders, particularly if you are looking for development finance. It’s also important not to underestimate how long your new development projects may take. Getting a development project started can take time, which means money goes out long before any comes in.
Stakeholders
Finally, once you’ve created your plan and budget, it’s time to engage with the stakeholders that your project will impact. These stakeholders include the neighbours and local councillors, your business partners, the local planning authority and potentially the local media.
Engaging with a communications professional at this stage may be worthwhile, especially for large, complex, or controversial projects.
Stage 1 – Preparation and Briefing
The next stage in the process of getting started is Preparation and Briefing. It’s often overlooked and done at pace, but we recommend carefully considering this stage.
You’ll need to do your research to ensure you create an informed brief for the design team to refer to during the project. This brief will include looking at market trends, talking with local agents, researching other developments in your area, and understanding the design trends for your type of project.
You will likely have done some of this research as part of your feasibility study, so bring it all together in a tightly defined briefing document. It’s important to firm up your design brief to help calculate your budget.
Think about:
What style of property do you want to develop?
What materials and building methods would you like to consider?
How thermally efficient should the properties be?
What type of fixtures and fittings is essential to your target buyers?
What aligns with your company brand?
The list of questions goes on.
It’s essential to consider the need for a complete briefing that you can use to inform your decision-making throughout the construction programme. This brief will ensure consistency and, in theory, a smoother ride throughout the project.
Stage 2 – Concept Design
Stage two is where the creative design part of your project starts and may be considered the end of the beginning of the project.
By now, you will have a good idea of what your development will generate revenue and profit-wise if all goes to plan. You start to turn your detailed plan into a design at this stage. Many will consider this the primary job of an architect, but as you can see, we do much more than just building design.
Get Off to a Great Start with your Development
The process of launching a property development project is a complex one. We generally recommend spending enough time in the early stages to give you the best chance of commercial success.
Remember, property development is risky, so it pays to do your homework and plan well at the beginning.
Contact us here, and we will help you get your development off on the right footing.
