As the markets for real estate usually remain stable in many areas of in the world, opportunities continue to exist for the development of real estate projects. This lecture is designed to analyze the real estate development process primarily from the perspective of the developer. The lecture concentrates on the development of a real estate project from its conceptual ideas until the operational start-up, and from the initiation of the concept designs until the project is defined. The lecture examines most of the phases of the development process, from idea inception through studying the various available options for the use of the lands and estimating the projects' costs and income to determine the best and optimum commercial use of the lands. This includes an overview about the development of the project's financial feasibility of real estate development, which involves the identification and evaluation of critical assumptions related to the creation, construction, and operation of economically viable commercial real estate projects. The lecture is introductory in scope and assumes attendants have little or no experience with the development process. An understanding of the real estate development process benefits not only potential developers, but investors, lenders, builders, public sector participants, and end-users of the products as well.

1. Real Estate Development
Commercial Real Estate Development
Youmni Al Jrab, PhD c, MBA
29th November 2012

2. 2
Objectives
• List the components of the real estate development processes
• Conduct market survey and examine the demand and supply of
the real estate market
• Determine the best and optimum commercial use of the lands
• Shortlist and appoint consultants
• Identify and evaluate the critical elements of a real estate
development
• Evaluate financial feasibility of real estate development
• A general overview of each phase of the development process

3. 3
Session Outline
1. Introduction
2. Real estate development phases
3. Land acquisition and site analysis
4. Land statistics & built-up area
5. Conduct real estate market study
6. Conduct market survey & survey analysis
7. Determine the best use of the land &
develop project brief
8. Prepare initial budget
9. Submit development proposal & getting
management approval
10. Shortlist consultants
11. Define consultant scope of work
12. Invite consultants
13. Single source consultant / open a
tender
14. Receive consultants’ proposals
15. Tendering process & consultant award
16. Selection criteria of consultants
17. Selection of building concept design
18. Design process
19. Construction phase
20. Q & A

4. 4
“Real estate or property development includes
activities that range from the renovation and re-
lease of existing buildings to the purchase of
raw land and the sale of improved land or parcels to
others. Developers are the coordinators of the
activities, converting ideas on paper into
real property. Real estate development is different
from construction.” - Wikipedia
Introduction

5. 5
• Developers buy land, finance real estate deals, build or
have builders, build projects, design, control and
orchestrate the process of development from the
beginning to the end.
• Developers purchase a land, determine the sales &
marketing of the property, develop the building program
and design, obtain the necessary approvals and financing,
build the structure, lease, manage, and ultimately sell it.
• Developers work with many different counterparts along
each step of this process, including architects, city
planners, engineers, surveyors, inspectors, consultants,
contractors, lenders, brokers, leasing agents and more.
What Developers Do

6. 6
Real Estate
Development Phases
Research &
Development
Phase
Design
Phase
Construction
Phase

7. 7
Research & Development
Phase

8. 8
• Land location
• Strategic location of the land
• Availability of tourist attraction and major public services
• Land direction, visibility & accessibility
• The land surrounding & overlooking
• Major developments
• Area infrastructure & environmental issues
• Future developments
• Land topography and soil type
• Land regulations, classification & related statistics
Land Description
Land Acquisition and
Site Analysis

9. 9
Site Analysis
Land Location

10. 10
Site Analysis
To Achrafieh
Strategic location of the land

11. 11
Site Analysis
To Achrafieh
4
1
13
2
5
6
2
3
4
5
6
The Lawyer’s house
BLC Bank
The Palace of Justice
The Doctor’s house
TVA Building
The Pharmacists’
Syndicate
7 Adlieh Round About
7
Availability of major public services

12. 12
Site Analysis
Land Surrounding:
Malls and cinemas:
ABC, Sodeco, Galaxy, Abraj
And Habtoor Le Mall
Universities:
USJ, AUST and Sagesse
Schools:
Lyccee Francais,
Girls School
Hospitals:
Hotel Dieux
Others:
Hypodrom, National
Museum,
Palace of Justice, CCF and
Sioufi Park

13. 13
Site Analysis
Site Front View

14. 14
Site Analysis
Panoramic Front View

15. 15
Site Analysis
Site Back View

16. 16
Site Analysis
Site Back View
Panoramic Back View

17. 17
Site Analysis
Site Side View

18. 18
Site Analysis
Site Side View

19. 19
Site Analysis
Site Side View

20. 20
Site Analysis
Site Side View

21. 21
1) Land location and Zone #: Achrafieh Zone 4
2) Plot area: 1,300 sq.m.
3) Total exploitation coefficient: 3.5
4) Extra balconies’ area: 20%
5) Extra area due to land location on a corner: 20%
6) Extra area for shafts & ducts: 20%
7) Allowed gross floor area: GFA 7862 sq.m.
8) Average number of floors: 13 floors
9) Allowed average floor area: 605 sq.m.
10) Average apartment per floor: 2 apartments
11) Apartment floor area: 300 sq.m.
12) Number of car parking pre each apartment
13) Total area required for parking spaces
14) Total number of parking basements
15) No. of Basements+ Ground floor+ Technical floor+ Typical floors+ Roof
floor (# B+GF+Tech.F+#TF+RF)
Land Statistics
& Built-Up Area

22. 22
• Review of the real estate market in the area
• Examine historical figures of demand and supply
• Projection of the upcoming demand
• Upcoming projects and types of supplied units
• Types of the existing projects
• Full description of the surrounding projects (areas, selling
prices, facilities, services, amenities, parking, finishing, no. of
floors…..)
• Performance of the existing projects
• Benchmark
Real Estate Market Study

23. 23
Surrounding Projects
Major Developments

24. 24
J. Towers:
- J. Towers is a 4 luxurious residential buildings
built on a 4,000m2 land.
- Location: Sioufi
- Floors: varies between 14 and 21 floors.
- Area of the apartments: 160, 230, 240, 250 & 300m2.
- Prices: 2,550$ additional 50$/m2 for each higher floor.
- Underground Cave for an additional 25,000$.
- Bank Facilities with Bank Audi.
- Extra Facilities: Gym and Garden
- Actual status: Excavation. Done in 32months.
Surrounding Projects

25. 25
Ashrafieh 4748:
- Ashrafieh 4748 is a 3 residential towers project.
- Location: Nahr ElMoot, facing Fattal.
- Floors: varies between 26 and 31 floors.
- Area of the apartments: from 185, 230 till 330 m2.
- Prices: 2,100$ additional 40$/m2 for each higher floor.
- 3 Stores: 1,000m2 each with a mezzanine.
- Bank Facilities with Bank Al-Mawared.
- Extra Facilities: Gym, Pool and Garden.
- Actual status: Excavation. Done in Dec 2013.
Surrounding Projects

26. 26
Landmark Tower:
- Landmark tower is a 2 residential tower project
built on a 3285m2 Land.
- Location: Facing the Palace of Justice of Beirut.
- Floors: 32 floors each building.
- Area of the apartments: 350m2.
- Prices: 3000$ for 10% of the project.
4000$ for 70% of the project.
5000$ for 20% of the project.
- Actual status: Design and legal Permit.
Surrounding Projects

27. 27
Ashrafieh 2270:
- Ashrafieh 2270 is a residential Building.
- Location: Behind the Palace of Justice.
- Floors: 10 floors.
- Area of the apartment: 175sm, 2 apartment per floor.
- Prices: 2,200$ additional 15,000$ for each higher floor.
- Bank Facilities with Bloom Bank.
- Actual status: Excavation.
Surrounding Projects

28. 28
Market Survey
Site Analysis
Real Estate
Market Study
Land
Description
Recommended
Land Use &
Project Type
Market
Survey

29. 29
Market Survey
• Select group of people of different (age, gender, marital
status, social status, income)
• Introduce the land, its description and its location
• Ask questions related to the recommended land use:
1) Project types & building functions
2) Unit sizes
3) Expected selling price
4) Finance options
5) Parking
6) Finishing type
7) Facilities, services and amenities required
8) Etc……

30. 30
Survey Analysis
Age Range
21 to 30 yrs
42%
31 to 40 yrs
44%
41 to 50yrs
11%
50yrs & above
3%
21 to 30 yrs
31 to 40 yrs
41 to 50yrs
50yrs & above
single
45%
married
18%
Married/1child
14%
Married/2&above
23%
single
married
Married/1child
Married/2&above
Marital Status
Work Position
Owner
13%
Top mngt
13%
Mid mngt
33%
employee
41% Owner
Top mngt
Mid mngt
employee
where do they live?
Beirut
78%
south
4%
North
4%
Mountains
14%
Beirut
south
North
Mountains
Demographics

31. 31
Survey Analysis
0
20
40
60
Less than 75 m2 75m2 - 100m2 100 m2 - 125m2 More than 125 m2
S1
Office Area
Series1
0
20
40
60
Less than 120 m2 120m2 - 150m2 150 m2 - 200m2 More than 200 m2
S1
Residential Area
Series1
Market Demand

32. 32
Survey Analysis
Residential Price per M2
28%
47%
18%
7%
Less than 2,200$
2,200$-2,500$
2,500$-2,800$
More than 2,800$
Office Price per M2
42%
47%
11% 0%
Less than 2,500$
2,500$-3,000$
3,000$-3,500$
More than 3,500$
Price per sq.m.

33. 33
Survey Analysis
0
5
10
15
20
25
30
35
40
Dependant Less than
2000$
2,000$ - 3,500$Above 3,500$
Monthy Income
Series1
Income

34. 34
Survvey Analysis
63
26
37
74
0
10
20
30
40
50
60
70
80
Residential to buy vs to Rent Offices to buy vs to rent
Options
Percentage
Series1
Series2
Buy Vs. Rent

35. 35
Survey Analysis
0
5
10
15
20
25
1
Single vs. Married Choices
single
married
Floor Choices

36. 36
Survey Analysis
Living in a Multi function Building
0
10
20
30
40
50
60
70
80
Residential &
Offices
Residential &
Commercial
Residential,
Commercial &
Offices
None
Series1
Building Specifications
0
10
20
30
40
50
60
Basic Medium High Luxurious
Series1
Extra Facilities
0
5
10
15
20
25
30
35
40
45
50
Pool Garden Gym All of them
Series1
Extra Parking
0
10
20
30
40
50
60
70
80
5,000$ -
10,000$
10,000$ -
15,000$
15,000$ -
20,000$
More than
20,000$
Series1
Facilities, Amenities & Additional Needs

37. 37
Best Use
of Land
Market
Survey
The Best Use of Land
& Project Brief
Project
Brief
Project Brief:
- Site description
- Design Intent
- Building types mix
- BUA & floor areas
- Floors Description
- Areas
- Unit Sizes
- Room Sizes
- Architectural Style
- Interior Mood
- Amenities
- Facilities
- Services
- Finishing
- Common areas
- Exterior spaces
- Car parking
- Elevators
- Etc…

38. 38
1) Develop building structure
2) Identify cost assumptions (construction, consultancy,
marketing and sales, overhead, management, financial,
utilities, legal, etc….)
3) Assumed selling prices
4) Allocate direct construction costs
5) Allocate indirect cost
6) Sensitivity to cost & break-even point
7) Sales projection
8) Sensitivity to sales & break-even point
9) Cash flow projection
10) Profit & loss
11) Financial indicators (ROI, IRR, GPM, Pay back, etc…)
Initial budget

39. 39
Development Proposal &
Management Approval
Project Brief
Project Initial
Budget
Land
Description &
Best Use
Development
Proposal
GO
AHEAD
STOP

40. 40
Design Phase

41. 41
Prepare consultant selection criteria based on:
1) Consultant profile
2) Types of performed projects
3) Types of projects’ designs
4) Number of years in consultancy
5) Awards achieved
6) Staff qualifications
7) Consultancy fees
8) Available resources
9) Delivery period
10) Projects Designs
Shortlist Consultants

42. 42
• Design & supervision
• Getting local permits
• Geotechnical services
• Civil / structural engineering
• Mechanical / electrical / plumbing
(MEP) engineering
• IT network
• Waste management
• Security / safety / control system
• Environmental study
• Vertical transportation consultancy
• Traffic assessment study &
traffic management
• Façade consultancy
Consultant Scope Definition
• Building maintenance
consultancy
• Fire engineering consultancy
• Interior design
• Landscaping design
• Water feature design
• Specialist lighting design
• Technical review
• Third party structural review
• Value management
• Wind tunnel analysis
• Acoustic consultancy
• Topographical surveys
• Water filtration
• Sewage treatment

43. 43
Send invitations to shortlisted consultants including:
 Project Brief
 Scope of work
 Terms & conditions of proposal
 Plot certificate
 Demarcation plan
 Site development statistics
 Guidelines
 Leveling drawings
 Secrecy undertaking
Invitation of Consultants

44. 44
Reasons of appointing one consultant without going
through tendering process:
1) Repetition of same building design already built
2) Competencies of consultant in special designs
3) Uniqueness of the project
4) Follow management’s instruction
5) Other reasons: financial, time, resources, special
equipment, staff, etc……
Single Source /
Tender Opening

45. 45
Consultancy proposal should include:
1) Understanding of the project
2) Scope of services
3) Proposed design stages & schedule
4) Fee proposal
5) Schedule of payment
6) Payment terms
7) Additional services & reimbursable costs
8) Scope exclusions
9) Provision of site facilities
10) Working hours
11) Termination
Receiving Consultants'
Proposals

46. 46
Tendering Process &
Consultant Award
Tendering Process
ProjectManager/
Development
Manager
TenderCo-
ordinator
ContractorConsultant
Senior
Contracts
Manager
Quantity
Surveyor
Prepare and send the following to consultants/
contractors approved on PRE 001:
1. Inquiry Fax signed by the Chairman of the Tender
committee
2. Form for Secrecy Undertaking
3. Letter of Invitation (only after signing the Secrecy
undertaking)
File a copy of each form in the Projects file
1. Prepare the Tender documents using Emaar Standard
Tender Documentation
Preparation of list of
contractors/consultants
Preparation of Tender documents
Distribute Tender to interested
tenderers and obtain receipt
Issue Tender Documents
Issue Letter of Invitation signed
by Chairman of Tender
Committee
Select Consultant / Contractor /
Supplier from the Registered List of
Contractors with regard to competency,
experience and past performance etc
and Prepare ‘List of Tenderers -
Approval Form’ (PRE 001) and send for
approval to the prescribed signatories
as per Form PRE 001.
Finalise the list (PRE
001) based on signing
of Secrecy undertakingRetain the original approved list.
A
START
Refer PRO
S.O.P C.1
and C.2
Refer PRO
S.O.P C.6
KPI
Tenders to be
floated within
specified time of
receipt of complete
tender documents
from Development.
Process No: UAE/PDT/PDD/PRO 1.9Version No: 4 (25 Feb 2007) Process Owner: Senior Contracts ManagerDept Name: Project (Contracts)

47. 47
Tendering Process &
Consultant Award
Tendering Process
ProjectManager/
Development
Manager
TenderCo-
ordinator
Contractor
Quantity
Surveyor
Senior
Contracts
Manager
Consultant
Issue Submission receipt
to tenderer
1. Compile clarifications to queries.
2. Attach all addendums, circulars, bulletins
etc to the clarification letter
3. Ensure it is signed by the Chairman of the
Tender Committee
B
Receive tender queries
from prospective
tenderers and forward it to
the PM
Tender Submission
Send clarifications with all
addendums, circulars, bulletins etc to
all tenderers and obtain collection
receipt and acknowledgement slip
from tenderer
Submit four (4) copies of
the bid to Emaar
(Contracts department)
Provide clarifications on the
queries posed by the tenderers
to the Tender Coordinator with
copy to Project Manager /
Development Manager
Tender Queries and Addendum, Circulars and Bulletins
A
Keep Tenders in secure
area till Tender opening
Process No: UAE/PDT/PDD/PRO 1.9Version No: 4 (25 Feb 2007) Process Owner: Senior Contracts ManagerDept Name: Project (Contracts)
Refer PRO
S.O.P C.7
and C.8
Refer PRO
S.O.P C.9
Review and get
Consultant to
respond

48. 48
Tendering Process &
Consultant Award
Tendering Process
Tender
Committ
ee
ProjectManager/
Development
Manager
TenderCo-
ordinator
ConsultantContractor
Quantity
Surveyor
Senior
Contracts
Manager
Tender Opening by
Tender Committee
B
Respond to Post Tender
Clarifications to the Chairman of
the Tender Committee
Review the Tender
Reports
Provide supplemental
Tender Reports to Chairman
of the Tender committee
Submit final Tender Report
recommendations to
Chairman of the Tender
Committee
Clarifications
satisfactory?
1. Register and maintain the
safe custody of Tender Bond
2. Make entries in Tender
Opening Register.
3. Monitor the validity of the
Tender bonds and arrange for
extension as required.
1. Prepare ‘Tender Opening - Record
Form’ (PRE 002)
2. Extract Tender Bond
3. Send copies to Technical
Consultant and Commercial
Consultants for review
Submit 4 copies of Technical and
Commercial Tender Reports to
Chairman of Tender Committee
Conduct detailed
technical and
commercial
evaluations
Open the Tender on behalf of the
Tender Committee and record name,
and price.
Receive the Tender Report on
behalf of Tender Committee and
forward to Project Manager and
Senior Contracts Manager for
review
Review the Tender
Reports
Issue post-Tender
queries to tenderers
Yes
C
No
Tender evaluation, clarifications and negotiations
Submit soft copy of technical and
commercial questionnaires to
Tender Co-ordinator
Is clarification
from tenderer
required?
No
Yes
Process No: UAE/PDT/PDD/PRO 1.9Version No: 4 (25 Feb 2007) Process Owner: Senior Contracts ManagerDept Name: Project (Contracts)
Refer PRO
S.O.P C.10
and C.11
Refer PRO
S.O.P C.12
and C.13
KPI
Recommendation to
Award of Contract
within specified time
of receipt of Tender
bids.
KPI
KPI :
1. Recommendation to Award of
Contract within specified time of receipt
of Tender bids.
2. Ensure procurement of Best Price
for each project.

49. 49
Tendering Process &
Consultant Award
Tendering Process
Tender
Committe
e
ProjectManager/
Development
Manager
Administrative
Assistant
Contractor
Quantity
Surveyor
Senior
Contracts
Manager
Consultant
Inform unsuccessful
tenderers and return
Tender Bond
Receive LOA and distribute as follows:
i. Contractor (Original)
ii. Project Cost Administrator (Copy)
iii. Project Manager (Copy)
iv. Insurance Administrator (Copy)
V. Contracts Department
Prepare the Award of contract - Approval form (PRE
003 / 003A / 003B as applicable) and attach with the
form :
i. Explanatory covering memo to Senior Management
and Board (if applicable)
ii. Summary of Tender Report submitted by consultant
iii. Budget Reconciliation
C
Arrange for Consultant review, Verify
and forward the Performance Bond
to Quantity Surveyor for filing
Performance Bond
Receive Performance bond from
Contractor
Schedule a Kick-off meeting to be
attended by successful contractor,
Consultant and Project Manager
Return countersigned LOA
Prepare LOA for
signature by
authorised
management
personnel Return Tender bond
Prepare the Draft Contract
based on the tender submission,
subsequent clarifications and
agreement reached
Review the contract
document
Review drawings and
specifications
1. Prepare ‘Contracts Document -
Approval Form’ (PRE 004)
2. Get ED (Projects) to sign on both
copies of the Contract
3. Keep one original and return one
original to contractor.
Prepare 2 original sets
of Contract document
and send to contractor
to be signed
END
Award of Contract and Preparation of Contract Documents
Distribute PRE 003 /
003A / 003B as
applicable with
supporting documents
for remaining
signatures as per
Authority Matrix
Register and maintain safe custody
of Performance Bond
Forward the signed
PRE 003 / 003A / 003B
as applicable and
supporting
documentation to
Senior Contracts
Manager.
Refer PRO
S.O.P C.14
and C.16
Refer PRO
S.O.P D.2
Review the PRE 003 / 003A /
003B as applicable with
supporting documentation and
recommend to Tender Committee
Keep the original
documentation and
file.
Process No: UAE/PDT/PDD/PRO 1.9Version No: 4 (25 Feb 2007) Process Owner: Senior Contracts ManagerDept Name: Project (Contracts)
Monitor the validity of the bonds and
arrange for extension, if necessary
Refer PRO
S.O.P D.1
KPI
Issue LOA within
specified time of
receipt of contract
award of aproval.
KPI
Contract to be
signed within
specified time of
LOA.
Review the recommendations
provided and approve or reject.(in
cases of rejection, process to be
repeated until approval is granted.)

50. 50
Selection Criteria of
Consultants
Grade is given for each criteria based on the objective of the developer and the
consultant who gets the highest total grade is selected:
Grade (1-10) Coeff.% T. Grade
1) Consultant profile 5 7 % 0.35
2) Types of performed projects 7 5 % 0.35
3) Types of projects’ designs 8 7 % 0.56
4) Number of years in consultancy 8 8 % 0.64
5) Awards achieved 4 3 % 0.12
6) Staff qualifications 7 10 % 0.70
7) Consultancy fees 9 17 % 1.53
8) Available resources 6 3 % 0.18
9) Delivery period 9 15 % 1.35
10)Design 9 25% 2.25
-------- ---------
100% 8.03

51. 51
Selection of Building
Concept Design
1) Compare design to the design intent mentioned in project brief
2) Compare consultant fee to budget (support of quantity surveyor QS)
3) Specialists’ opinions and management approval

52. 52
1) Concept Design Sign-Off
2) Schematic Design Sign-Off
3) Commence Design Development
4) Design NOCs to Authorities
5) Complete Soils Report & Tests
6) Shoring & Excavation Permits & Commence Shoring &
Excavation
7) Design Budget
8) Design Development Sign Off
9) Commence Working Drawings
10) Commence Piling Package
11) Prepare BOQ
12) Piling Permit & commence piling
13) Working Drawings & Tender Documents Sign-Off
14) Contractors invitation and appoint contractor
15) Contract Award Budget
16) Commence Building Construction
Design Process

53. 53
Construction Phase
Start of Construction

54. 54

55. 55
Thank You!