I will also look at the insurance factors that affect a real estate developer’s position. Literature review Various literatures offer a different understanding of the concept of real estate development with some looking at it as being similar to property development, while others looking at them differently. Basically, real estate development refers to a process that makes it possible for land use to be intensified for the purpose of coming up with housing structures for occupation. Real estate is also looked at as a concept that makes it possible for construction and necessary access of infrastructure, and at the same time allows legal subdivision of property for the purpose of vertical construction. Real estate itself is looked at as a projection that takes in the aspect of money, space and time. Through real estate, creation and management of time and space is enabled with the aim of generating specific estimated cash flows over a particular period of time. A developer refers to and individual or a corporate organization that develops land and buildings to increase their value to specified amounts over time. Developers in the real estate industry are therefore individuals or organizations who bring together land, labor and capital and plan how to manage and facilitate the market in a way that the requirements of the users are sufficiently met. In addition to this basic definition, the real estate industry is characterized by various types of developers who may be classified on the basis of their strategic capital role, geographic scope and ownership structure or the type of products they deal with (Davis 89). Real estate developers may therefore be classified in three most common categories: trader developer refers to the type of a developer who assumes the entire risk of the project until it’s completed. A trader developer then makes a complete sale of the land and property which results to the main goals as being exploitation of profit margins before and after the completion of the project which results to development gains. An investor developer on the other hand refers to organizations or individuals who carry out various projects and establish their portfolio in a way that they meet their main goals of development profits and capitalization on property appreciation. Service developers finally refer to individuals or organizations that render specific real estate services and therefore act as service providers to third parties in the name and account of the clients while on their part do not assume a majority of the risks. Unlike the other types of developer’s service, developers bear operating risk other than the capital risk (Gaylon & Phillip 67). Real estate development Through real estate development, a company or an individual aims at achievement of several well laid down objectives. The first major purpose of real estate development is to recognize potential opportunities that will build on the value of the developer with time. Real estate development is also carried out with the objective of generating future cash flows for a developer, which are relative to land or buildings and in the process, ensure they are sustainably exploited. Through real estate development, it becomes possible for an increase in the value of a building or the land to be increased
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Name: Instructor: Course: Date: Major Real Estate Development Risk Management and Insurance from the Developer’s Position Introduction For many decades, man’s existence has been characterized by the existence of different kinds and forms of risks which play a major role in designing how human beings manage and develop various perspectives of the economy and pacts of the organization…
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