Residential Real Estate Development

Residential Real Estate Development

Brief Excerpt from Industry Overview Chapter:

Companies in this industry prepare land for development and subdivide it into lots for sale to builders; services may include excavation for the installation of roads and utilities. Major companies include Forestar Group, The Related Companies, and WCI Communities (all based in the US), as well as Nexity (France), Tokyu Land (Japan), and Vanke (China). Major homebuilders also often have their own land development divisions.

COMPETITIVE LANDSCAPE

Demand for land development services is driven by population growth,?personal income, employment rates, interest rates, and access to capital. The profitability of individual companies depends on accurate cost estimation and successful bidding. Large companies have advantages in having greater access to capital. Small companies can compete by focusing on a specific geographic area or market niche. The industry is fragmented; the top 50 largest firms account for about 40% of industry revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services are subdividing real property into lots and preparing lots for sale to builders. Construction of new single detached residential buildings account for about 30% of industry revenue, followed by project management services and land subdivision management services (each accounting for about 20%). Companies in this industry focus on residential property but may also subdivide land into commercial or industrial tracts. Some residential real estate developers specialize in the development of apartment and condominium towers or communities in densely populated urban areas.