Real Estate Planning and Development Notes

• The notes cover Real Estate Planning and Development, including property development, regulations, and urban planning tools.

Real Estate Development (Property Development)

• Real estate development involves the constant reshaping of the built environment to meet societal needs.
• It adds economic value through various development stages.

Real Estate Development Process

• The process includes multiple stages that can occur simultaneously, not just consecutively.

Pre-requisites of Development

• Financial backing, government compliance, community coordination, and time are all pre-requisites.

Value

• Value is created by providing space that meets society's needs.

Knowledge Areas in Development

• Knowledge is required in prospective markets, urban growth patterns, neighborhood associations, traffic, legal and local regulations, contracts, building design, site development, construction, environmental issues, infrastructure, financing, risk and time management.

Real Estate Participants

• Private sector aims to minimize risk while maximizing personal or institutional objectives.

Public Sector

• Public sector aims to ensure public safety, manage development impacts, and promote community-consistent development

Real Estate Developers as Entrepreneurs

• Developers combine resources to create a product of greater value than the component costs.

Classification of Property Developers

• Developers may develop to satisfy their own needs or the needs of others.

Producer Consumer Gaps

• These gaps come resulting from conflicting objectives between producers and consumers.

Mitigating Gaps

• Regulation, remunerative means, and normative preferences can provide better quality development.
• Regulation: Developers are compelled to improve quality.
• Remunerative Means: Developers are financially incentivized to improve quality.
• Normative Preferences: Developers desire to improve quality.

Opportunity Space Theory

• Internal and external regulations limit development actors, bounding their opportunity space.
• A larger opportunity space allows developers greater autonomy.

Factors Constraining Developer's Opportunity Space

• Site Context: More challenging sites reduce opportunity.
• Regulatory Context: Stricter regulations reduce opportunity.
• Market Context: More demanding markets reduce opportunity.

Points to Consider in Real Estate Development

• The process is not straightforward or linear, but is an art.
• All stages should be considered, and reflects an ideal version of processes, which is interdisciplinary, dynamic and global.

Tools Approach

• The tools approach focuses on instruments, mechanisms, and actions used by policymakers.

Policy Instruments

• Policy instruments operate in bundles and are never used in isolation.

Types of Policy Instruments

• Intended to Shape Behaviours, Intended to Regulate Behaviours, Intended to Stimulate Behaviours, and Intended Develop The Capacity Of Development Actors.
• Intended To Shape Behaviours: Sets market context/decisions.
• Intended To Regulate Behaviours: Controls market actions.
• Intended To Stimulate Behaviours: Lubricates market actions.
• Intended Develop The Capacity Of Development Actors: Enhances ability of actors to operate.

Detectors

• Basic social resources are available for governments to gather information and modify behavior.

Basic Social Resources

• Nodality, Authority, Treasure, and Organization.
• Nodality: Capacity to operate as a node in information networks.
• Authority: Legal power.
• Treasure: Possession of assets.
• Organization: Capacity for direct action.

Classification of Urban Design Tools

• Ownership and Operation, Regulation, Incentives and Disincentives, Establishment, Allocation, Enforcement of Property Rights, and Information.
• Ownership and Operation: State implements policy directly.
• Regulation: State regulates other actors.
• Incentives and Disincentives: Designed to align actions with policy.
• Establishment, Allocation, & Enforcement of Property Rights: Protects property rights.
• Information: Influences actions.

Shaping Instruments

• Shape decisions by setting the broad context for market decisions and transactions

Subtypes of Shaping Instruments

• Market Structuring, Investment Provision, and Generating Information or Promoting Coordination.
• Market Structuring: Establishes overarching market context.
• Investment Provision: Involves public investment in public and collective goods.
• Generating Information or Promoting Coordination: Informs decision-making, or increases coordination.

Regulatory Instruments

• Seeks to regulate or control decisions by restricting choice sets.

Subtypes of Regulatory Instruments

• Regulatory Instruments Per se, Enforcement Procedures, and Regulatory Procedures.
• Regulatory Instruments Per se: Managing aspects of an activity.
• Enforcement Procedures: Ensuring regulatory actions.
• Regulatory Procedures: Actions related to regulation details.

Stimulus Instruments

• Supports policy intentions and facilitates markets, using positive stimuli.

Subtypes of Stimulus Instruments

• Direct State Actions, Price-Adjusting Instruments, Risk-Adjusting Instruments, and Capital-Raising Instruments.
• Direct State Actions: Overcoming obstacles.
• Price-Adjusting Instruments: Adjusts prices .
• Risk-Adjusting Instruments: Adjusts risks.
• Capital-Raising Instruments: Improves finance availability.

Capacity Building Instruments

• Capacity-building instruments includes building trust and social capital.

Sub Types of Capacity Building Instruments

• Developing Human Capital, Instituitional Organizational Networks and Capacity, Reframing Cultural Mindsets, and Enlarging the Stock of Ideas and Concepts.
• Developing Human Capital: Developing skills and abilities.
• Enhancing Institutional Organizational Networks and Capacity: Establishing networks for information exchange.
• Reframing Cultural Mindsets: Encouraging mindset shifts.
• Enlarging the Stock of Ideas and Concepts: Actions expanding knowledge of possible outcomes.

Real Estate Development Stages Model

• Standard sequence from project inception to asset management, also applying to redevelopment.

The 8-Stage Model

• Idea Inception, Idea Refinement, Feasibility, Contract Negotiation, Formal Commitment, Construction, Completion and Opening, and Property and Asset Portfolio Management.
• Idea Inception: Seeking need and knowledge.
• Idea Refinement: Site selection and preliminary design.
• Feasibility: Market analysis and cost comparison.
• Contract Negotiation: Design finalization, gets loan approvals and contractor.
• Formal Commitment: Signing contracts.
• Construction: Budgeting and work approval.
• Completion and Opening: Staffing and advertising.
• Property, Asset & Portfolio Management: Ensuring asset performance.

Millington's Model

• Development Concept, Site Search and Study, Planning Investigations, Initial Financial Appraisal, Market Research, Outline Planning Application, Arrangement of Finance, Detailed Financial Appraisal, Taxation Implications, Design Stage, Detailed Planning Application, Building Control Approval, Costing of the Construction, Tender Documents Construction Contract and Site Purchase Supervision of a Development and Marketing of a Project.

Millington's Stages of Real Estate Development

• Relate the concept to environmental factors and evaluate them financially
• The concept should be related to need to fulfill property for specific needs.
• Determining possible range of uses and users at early stages.
• Early investigation identify challenges.

Site Search and Study

• Balancing suitability based on geographical and economic advantages and disadvantages.
• Identifying both suitable and available sites.

Topics in Site Suitability

• Location in Relation to Other Developments, Legal Interest, Cost of Acquisition, Size and Shape of the Site, Physical Characteristics and Soil Structure, Planning Situation and Specific Planning Considerations, Availability of Good Access, and Availability at Acceptable Cost of all Required Services for The Development

Planning Investigations

• Limits what conditions may be placed.
• The Restrictions are likely to impact value/costs.
• Consider possibility of planning gain.
• Determine impacts from the historical/environmental conditions.

Initial Financial Appraisal

• Determining potential financial viability.

Market Research

• Obtains information regarding demand.
• Indicates demand and ability to pay necessary prices.

Topics in Market Research

• Existence of effective demand, Strength of any such demand, Type and quality of development, satisfy effective price.

Outline Planning Application

• Clarifies planning situation.

Arrangement Of Finance

• Ensuring required funds are available.

Detailed Financial Appraisal

• Estimating usable space that can be created.
• Providing indication of demand and reliably predict financial success.

Required Knowledge in Preparing Financial Appraisal

• Current market values, market yields, availability and cost of finance, type of consulting professional needed, selling costs, or letting the completed development, planning impact policies.
• The time periods for completion purchase.
• Design the development obtain approvals.
• Construct, and selling.

Detailed Planning Application

• Obtains planning approval before development.
• Determines the precise amount of building, materials, access that can be constructed.
• Estimates value of completed development.

Building Control Approval

• Provides the details what type of development is allowed.

Site Purchase

• Acquire a suitable site at price before no income, interest charges and costs are incurred.

Supervision of a Development

• Ensure activities follow acceptable schedule, is acceptable standard of design, is acceptable quality, and project stay approve within cost limits.

Marketing of a Project

• Project Marketing starts the early stages major project with substantial pre-letting or preselling.

7-Stage Model

• Land Banking, Land Packaging, Land Development, Building Development, Building Operations, Building Renovation, and Property Redevelopment.
• Land Banking: Acquiring land for future development.
• Land Packaging: Improves raw land/property.
• Land Development: Constructs the horizontal improvements.
• Building Development: Builds vertical buildings.
• Building Operations: Operators manage a built project.
• Building Renovation: Corrects deficiencies.
• Property Redevelopment: Redevelop.

The Real Estate Development Matrix

• It combines the seven stages of the real estate development process across the horizontal axis with the eight task categories.

Eight Development Task Categories

• Acquisition, Financing, Market Analysis and Marketing Strategies, Environmental Issues, Approvals and Permits, Physical Improvements, Transportations and Accessibility, Sales and Disposition.

Acquisition

• Acquire a property with attractive price.

Feasibility Studies

• Done early during acquisition to declare project is feasible during physical/engineering feasibility, market feasibility and financial feasibility.

Underwriting Requirements

• Focus on project ability to attract required amount capital.

Due Diligence Reviews

• Ensures that assumptions is valid.

Areas in Due Diligence

• Legal, physical, and market data.

Financing

• Requires capital for acquisition.

Tasks

• Financial projections of expenses and capital; determine how to secure funding.

Financial Management and Reporting

• Ensures funds are managed properly.

Market Analysis and Marketing Strategies

• Captures the market opportunity within market conditions.

Strategies

• Conduct site level strategies that includes market conditions,HABU, time to bring land use, how the land uses will be brought market.

Analysis

• Analyze conditions of market and competitive properties.
• Evaluate with promotion and appropriate media.

Market Forecasting Strategies

• Analyzes best of future to evaluate.

Environmental Issues

• Considers environment.

Approvals and Permits

• Securing government and private approval permits.

Physical Improvements

• Secures what improves done, that will conform.

Transportations and Accessibility

• Requires tenants and will supplier use space.

Sales and Disposition

• An attempt to create value on staged of development.

History of Land Use and Regulation

• The following are relevant laws, executive orders, and related information concerning land use regulations.

P.D. 933

• It created Human Settlements Commission.

P.D. 1396

• Iit created Ministry of Human Settlements.

Ministry of Human Settlements Powers

• Promulgates national standards, guidelines and environmental management, effects a single regulatory system , prepare plan board authority, translate plans.

Executive Order No. 648

• This reorganized HSRC on June 2, 1978, assumming regulatory function housing.

RA 7279

• Also known as Urban Development and Housing Act of 1992 (UDHA).

Executive Order No. 90

• It abolished Ministry of Human Settlements, created the Housing and Urban-Development and Coordinating Council renamed HLURB.

Republic Act 10121

• Philippine Disaster Reduction and Management Act.

Republic Act 11201

• Consolidation of function to housing and land.

Department of Human Settlement and Urban Development

• It manages housing and settlement, and plans regulatory policy.

National Housing Authority

• Provides shelter.

Home Development Mutual Fund (Pag-IBIG)

• National savings program.

Social Housing Finance Corporation

• Social housing programs catering to low brackets.

National Home Mortgage Finance Corporation

• Engages loans that helps finance homes.

Environment Land Use Planning and Development Bureau

• Performs human functions related.

Housing and Real Estate Development Regulation Bureau

• Regulates development of Condo.

Homeowners Association Community

• Formulates policies monitored.

Land Use and Regulation

• It Involves in the regulation of the use & development of Real Estate.

Use and Plan/Policies

• Defines the ways a land should be used.

Explicit Land Policies

• Affects land directly involved in the national plans.

The National Plan Hierarchy

• Lists Investment Budget Programs for national, regional, provincial, city/municipal levels.

Implicit Land Policies

• It affects more of land.

Shortcomings of Land Use Plans

• Supply-driven; lacks integration; is outdated; has inappropriate planning principles, Western planning concepts haphazardly and social equity compromise.

The WEAK Linkages

• Has small amount of budget with spot zoning.

Land Use Drivers

• It helps explain land naturally.

Zoning

• Is part of a management system to control instruments.

Land Use Conflict

• Land encroaching areas.

Constitution

• Gives priority humanity measures.

Land Use

• Rationale is the approach of the land in group functions.

EO 648

• Promote land control.

RA 9729

• States the LGUs shall be the 1st Climate agencies.

RA 10121

• Says LGUs produces risk production plans.

Laws

• Includes Protected area (RA 7586).

Process

• Includes stakeholders, 2, the horizon is set vision goal 3 analysis and objectives.

Zoning

• Includes regulations must reason.

Appeals

• Quasi-Judicial hearings.

Covenants

• Deed will set the property and limit is use.

Easement

• Rights will affect the use.

Step 1

• Organize resource in order decision needs assessment.

Step 2

• Stakeholders recognize play sector.

Step 3

• Vision sets goals objective is 4 vision review.

Analyze

• Involves 5 analyze assessment.

Step 4

• Set goals based on identified issues, needs, visions.

Steps5-6

• Establish a 6 by translation spatial thrust of preferred thrust.

Prepare the Land Use Plan

• To translate the objectives.

Draft the Zoning Ordinance

• To integrate Zoning.

Public Hearing

• Consultation by document.

Review Adopt

• Approval from documentation.

Implement the CLUP and Zoning

• Strengthening the tools will implement CLUP.

Monitor and Evaluate

• Assess fully plan effectively during.

Acronyms

• Provided used throughout these notes from DHSUD to PPFP.