What is a Property Developer? Property Developer Explains
You might have heard the terms “property developer” or “real estate developer” being used, either on the TV or in conversation.
And you’ve probably got images of a suit-wearing, slick-haired fast talker. A bloke who is always on the phone and drives a posh car. While that might be the case for some developers, it’s a bit of a stereotype.
Property developers are doing a job, just like most folks. Their job happens to be developing real estate or property for profit.
But even amongst property developers, there are a few different types of players in the game.
Each different type of property developer serves a different purpose and develops different sorts of property. But you might still be wondering, “what is a property developer?”
In this useful article, we’re going to explain some of the differences between the various types of property developers, so you walk away informed about each one.
By the end, you’ll be the expert!
Small to Medium Residential Developments
When we talk about this type of property developer, we focus on boutique property developers who focus on small to medium-sized residential development projects.
Check out the Boutique property developers killing the game in Melbourne right now.
These are sometimes called “low density” developments. These are usually when a developer knocks down an older home on a lot suitable for development, builds two or more units or townhouses on the lot, and subdivides the dwellings so they can be sold as separate titled lots.
What is a Subdivision?
A dual occupancy subdivision is when you build two or more dwellings on an existing single title and then subdivide the lot to create two separate titles.
Here is some more detailed information on strata subdivisions for dual occupancy development projects.
The reason why smaller property developers do these sorts of projects is so they can sell each lot and maximise their return on investment.
What a property developer at this level does is acquire land that is suitable for a dual occupancy project. Then they start the planning process, which encompasses surveying, town planning permits, and construction plans.
The properties are then placed on the market as off the plan sales as they are being constructed so that the buyers can settle straight away, and the developer sees a profit sooner.
Example of Small or Low-Density Property Developers
A perfect example of this level of developers is the team right here at Little Fish. This is our bread and butter. We live and breathe smaller developments, and we know the low-density real estate development process inside and out.
As well as doing our developments, we also manage projects for “armchair developers” – people who own land but don’t want to be super involved in a development.
Medium Density Developments
A step up in size from smaller residential projects are medium or mid-sized developments. These are larger sized townhouse or unit blocks. For example between 15-30 different dwellings.
Medium-density multi-unit developments are usually built on a larger block of land. Or they occur when a developer acquires several lots next to each other and subdivides them. These are more significant projects with bigger profits and more to manage.
For example, check out this flagship project from Burbank Urban.
Larger Residential Developments – High Density
These types of property developers focus on larger residential projects.
A perfect example of this is an apartment block. These are often twenty or more apartments in a multi-story block built on older commercial buildings or large residential blocks.
These high-density residential developments might even have hundreds of apartments in each tower. Sometimes rezoning is involved in building these. Which means working closely with local governments to get the right approvals and plans sorted.
These types of development are occasionally mixed-use as well. This means that there are commercially zoned properties at the bottom of the complex. These might be retail stores and eateries, for example. While above are the residential dwellings.
Often these homes are sold off-the-plan as well and are attractive to investors who are looking for rental returns.
An example of this sort of property developer is Central Equity. Head over to that site to see heaps of stellar examples of high density, larger property developments.
High-Density Commercial Developments
Yet another type of property development are spaces constructed purely for commercial use. Like a high rise or a shopping center, for example. The tenants are usually offices or retail outlets in this case.
These are heavyweights, playing with millions of dollars, and there are some serious returns on investment happening at this level.
An example of this is Empire Properties.
Greenfield Property Developers
You’re learning what is a property developer as you read this article.
Finally, we have property developers who undertake the largest type of property development possible – greenfield developments.
This is where vast areas of land, for example, old farming land, is subdivided and developed to build a brand-new housing estate. We are talking whole new suburbs of major cities here, as urban sprawl spreads.
These projects are undertaken with the approval of and direction from state governments.
For example, in Victoria, the “Growth Areas Authority” (or GAA) was launched back in 2006 to address a lack of “coordinated planning and development across Melbourne’s greenfield sites.”
This organisation works in tandem with local government (councils) and property developers. Together they plan the development of new suburbs in growth corridors. They have designed over 60 new suburbs, areas for every day, working Australians to live and enjoy their leisure time.
These new suburbs are often attractive for first-home buyers. This is as they can both get a property for significantly less than an inner-city location. They can also buy a house while taking advantage of first-home owner grants, which can be up to twenty thousand dollars.
A great example of a greenfield company is Greencor.
Thinking of Becoming a Property Developer?
So now you know what is a property developer, but what are the next steps? If you’ve read this and this type of work appeals to you, you might be wondering what the steps are to become a property developer?
The best entry point is to begin by developing a small scale, low-density residential project. The reason behind this is that all property development is a high-risk venture. And the larger the project, the larger the stakes. Besides, very few people are going to have the sort of capital it takes to fund a more substantial development anyway.
Even a medium density development needs heaps of money to fund. These players have usually worked their way up the chain by starting at the bottom. Or subsidiary companies owned by larger corporations undertake the high density builds we’ve discussed in this article.
So, let’s assume that you are thinking of undertaking a small-scale, residential property development.
Luckily here at Little Fish, we’ve developed lots of useful resources on the steps to developing real estate, including this helpful blog article.
And, we are also able to be engaged as professional project managers. This means that if you don’t have the time or commitment required to manage a development yourself, we can do the hard yards for you.
You can stay as plugged-in to the process as you like via our dedicated project portal.
Check out our development management services also.
In short, what is a property developer? It is an individual or a company that builds real estate, or property, on land.
These might be subdivided townhouses on a residential lot, all the way through to whole suburbs developed as a greenfield project. We have learned about each one in turn.
If you’re interested in becoming a residential property developer, call Little Fish on 1300 799 277 for a free consultation.
Alternatively, check out these 12 property development tips.