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It is a dream of every individual to have a house or residential property, to peacefully live their life. To purchase any property the customer has to make a deal with the constructor of that property. The report is made by highlighting the key areas of the residential development process which includes the highest and best uses for a site (HBU). The other core concepts of planning and development of the property will be described with the help of initial designs shown in this report. The study also includes external issues which impact property development decisions. The profit and market analysis of the residential property development is shown by some examples. The fundamental and major requirements are also discussed along with the different residential property development submarkets. All the above points are considered in the context of residential property constructor with some examples and the main focus of residential property address is on the site of 5-9 Barkly Street, Box Hill.
ULO 1: Describe the fundamental requirements and stages of residential property development
Residential property development is a real estate development for residential purposes. These developments are called a part when the property is divided into lots with a house built on each lot (Rachmawati, et. al. 2019). To develop the property on the best site the constructor has to analyze the location, land, and surroundings of that area. Property Development involves a broad range of activities and processes including purchasing buildings, land, and developing facilities (Bettaieb, and Alsabban, 2020). The constructor needs to commit to equities, expertise, and talent to convert the property from its current use to better use. The constructor needs to acquire space and necessary legal permissions to complete a project.
The site purchase value means the value of unconstructed land or building which the constructer has to build or repair the premises in the future. For the valuation of a residual site or property, the residual method is a great way to develop accurate prices for real estate projects. The method can be affected by three main models such as gross development value evaluation, property developer's profit, and building costs and fees. The address of site 5-9 Barkly Street, Box Hill Vic 3128 is offered to the purchaser from this side.
Total construction costs refer to the entire cost of construction performed by the constructor on the tenant's work. The construction costs include labor, raw materials, licenses, electricity use during construction, legal permits, insurance cost, payable tax cost, etc (Best, 2022). After the completion of a project, the constructor establishes a sales value of the new build property. By adding the total costs of construction, purchasing value of the property, and the profit margin of the constructor, the final sale value is calculated by the constructor, which is shown to the buyer of a property. As concluded the total price is the indicative selling price range by the constructor between $3,250,000 to $3,575,000 and the house property, median sale price includes $1,680,000.
Coming up to the SDG awareness module also called the global goals which stand for sustainable development goals models of the company. The SDG is a universally accepted agenda of development, and it is anticipated that everyone, accomplish their knowledge, and awareness, and be ready to contribute to the world for SDGs awareness (Omer, and Noguchi, 2020). Around 193 United Nations member states adopted the global goals in September 2015. The UN agenda delivers the decade of action program which is known as FAWCO for 2020-2030 in the sustainable development goals (SDGs). For residential property development, the SDGs play a major role as to know about the unity of constructors in the world to estimate the common price of the property for the various location.
Evaluation of planning issues in residential property development is a problem that is created in the process of planning, and construction of residential property at any location (Ibraeva, et. al. 2020). There are eight stages of the property development process such as idea generation, idea purification, the possibility of an idea, contract negotiations, commitment point, construction, beginning of operations, and timely management of assets. In the first step of idea generation, there is an issue that how differentially the idea is developed to compete with the other residential property. At the beginning of construction, after the idea was implemented, the constructor face issues related to asset allocation, labor, work done on a planned basis, etc. To overcome these types of issues the constructor has to choose an effective planning strategy and run on the path of that planning to turn the idea generation into profit generation for a company.
The income and education of a country's people affect the property development criteria in the country. As demographic changes occur at every small distance of a country the construction of a property should be based on the local people's mentality, income, and education (Zhang, and Guhathakurta, 2021). The highest and best-use analysis of the selected site depends on the legal and financial capacity of the constructor to purchase and legally authorized that property. The selected property will be physically presented and lead to maximum profit and production for the constructor in the world of the real-estate business.
For instance, 5-9 Barkly Street, Whitehorse is a hub of education, business, and healthcare, and the prices are high for that area's property. As the availability of the best location of the property in Whitehorse city areas, the land size of selling residential property is 1396 sqm approx. at the end of March 2022. The prices and property size are estimated according to the location, total cost, and demographic and social changes in the country.
ULO 2: Differentiate between the different residential properties submarkets
When people hear about a residential property they only think about one house, but there are major submarkets categorized into five residential properties: multi-family homes, cooperatives, single-family homes, land, and condominiums (Lykostratis, and Giannopoulou, 2022).
The single-family homes are built in this way that is affordable by an individual and has a lower cost of investment. Whereas, multi-family homes have higher investment costs than single-family homes. Due to the high demand for single-family homes, the constructor makes more single-family homes than multi-family homes (Bagheri, et. al. 2018). The land one of the category of the residential property refers to the piece of a plain area on which the purchaser builds or construct a building according to the needs. The condominium is a property in which the residence is owned by one family or an individual in a community where the common areas are made to share with other condo owners (Harris, 2022). On the other hand cooperative housing society is a primary residence way in which the homeowners do not have rights to social work but each individual in that society is a shareholder (Montero, 2022).
The main focus of the constructor is on single-family houses and condominium residential properties. The construction of condominiums and residential property contributes to SDG, by making a good social infrastructure for the individuals of a country. And single-family houses contribute to SDG as there is a lot of investment in property lines, as private investors are increasing day by day in the country.
As the prices are affordable according to the location of the residential property the new investors or purchasers of a property are attracted to the constructed work. The effective use of promotion of new buildings pulls many buyers towards the property.
Talking about the vision of the site is to make a higher profit by selling a large number of properties to well-mannered people who can maintain the building and cooperate with the constructor. There are four constructed buildings having 4 floors including ground-floor and terrace, in which each floor has four residential sites in the condominiums. On another side, there are eight well-constructed small-family houses available for sale at affordable prices for individuals, in which each house has 2BHK and a terrace is included. This type of property will make a profit in both condominiums and single-family homes, as if the person wants to live individually or only with family there are single-family homes available with the constructor. And if the individual wants to live in the people surrounding area then also condominiums sites are available from the constructor side.
ULO 3: Perform a “highest and best use” analysis and basic feasibility
Residential property development is similar to commercial building projects, as for the construction of both ones should have to study the construction requirements and planning laws. The focus of residential property developers is on converting, renovating, and building a piece of land into residential homes. The constructor of the property is responsible for purchasing land and developing it by renovating or establishing new buildings on it.
As every business is developed to make a profit, the real estate property business has huge chances of high-profit margins in property dealing. In residential property development, the profit margin is generally between 16 to 20%, as including the total cost and profit margin of the constructor the final cost of a property is calculated.
For example, if the cost incurred on labor is $3,00,000, raw materials is $4,00,000, license is $80,000, electricity use during construction is $1,00,000, legal permits is $2,00,000, insurance cost $4,00,000, payable tax cost $2,00,000. After the cost calculation if the profit margin is at least 16% then the selling price of a property is approx. $19,50,000.
From the above example, the residential developer produces the highest value of a site based on the abstract idea of maximum productivity. To analyze the feasibility there are four benchmarks
to meet the highest and best use such as legal permissibility, physical possibility, financial feasibility, and maximum productivity (Carter, and Leard, 2021). In legal permissibility, this is considered that only those uses are accepted which is easily permitted by legal authority for the continuation of the work. In the physical possibility, the use is explored in the given shape, characteristics, topography, and size of the property.
In financial feasibility, to cover up the costs and make a profit for the constructor it is a must to generate adequate revenue by the highest and best use. At last in maximum productivity, the optimum use of raw materials leads to the highest return for the constructor, it may be in the form of NPV, residual land value, IRR, or development profit.
ULO 4: Consider the impact of a range of social, sustainable, ethical, economic, and cultural issues in property development decisions
Every business decision or even property development decision is mostly affected by ethical, cultural, social, economic, and sustainable issues, as these all impact the business from the external environment (Pires, et. al. 2018). As ethics says that one person should help others for the betterment of society, same as in the world of property business the developer has to maintain trust with their purchaser. If the purchaser has a trust issue with the property developer then ethics can negatively impact the decisions of property development.
If the culture of a local area site is traditional then the purchaser also wants a traditional structured building or if the locality is modern then the building should be structured in a modern way. The culture develops the issues related to the decisions of the constructor about the structure of a building. The economic issues create a greater impact on property development decisions, as it includes all legal and political issues of the country. As the land is permitted by the government of the country the property cannot be developed without the permission of any land, and the permission process creates many issues in a time-consuming way for the property developer.
The decisions on property development are also affected by social issues, as nowadays every country's government is very strict about nature and the public of a country. So the property developer also has to do some social activity to influence the real estate market functioning and nature. The social issues-related decisions create extra work for the property developers. The last external environment that impacts property development decisions is sustainable issues. To capture the sustainability value property developers always face challenges (Dos Santos, et. al. 2019). In residential property development, the decision maker has to develop a strategy in which the property development has a less negative impact on the environment in the country.
From the above report, it is recommended that the constructor or property developer should purchase and build the site according to the purchaser's point of view. It is also recommended that all external and internal issues will be deeply studied before making any plan for developing the property. It should be included in the plan or strategy how will be the raw materials are allocated without harming the environment or nature. From the highest and best use feasibility, the constructor should consider all criteria before start making the construction building. According to the market and financial analysis, the developer should calculate the proper and compatible price for a property, to attract more purchasers to a site. It is also concluded that the property developer is paying attention to the single-family homes and condominiums site to get a return from different buyers by covering both types of property. There are affordable prices and effective advertisements of properties to attract a large base of property purchasers by the constructor.
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