Real estate development can only be successful if you get the metrics right!

What does this mean? If you intend to become a real estate developer or are looking for a site to develop, you first need to know that you’re looking for, you need to know because you are looking for it

What this means is that you must establish if there is demand for a certain real estate product; Once you know there is demand, you can start looking for the appropriate site to develop to meet that demand. This is called research.

It is useless to develop a property that nobody wants; either because it’s in the wrong location or it’s the wrong product for that area.

Most people understand residential property, so I’ll use that as an example. If you want to develop departments you must establish where there is demand for that product. Don’t just say “I want to develop apartments in my suburb” as this can get you into real trouble.

If your market research shows that there is a demand for apartments in your suburb, move on to the next step in the development process, but not before establishing market demand. By the way, you haven’t started looking for a development site yet!

Assuming you have found an area that is in demand, you now need to consider whether there are any supplies coming into the market to meet the demand you have identified. Drive around the area and see how many apartment blocks are being built.

Talk to local real estate agents about what’s on the market and new real estate developments coming up; Agents know a lot about their area. Agents will also tell you about locations to avoid or areas to focus on.

Most Local Councils publish records of planning/development applications that have been submitted or approved. You may want to visit your local council and ask a developer about the number of apartment applications they have determined or have in the system at the moment.

And don’t forget the Internet; There is so much information available on the web that you simply cannot afford to ignore it.

What you are trying to establish is whether there is an oversupply of apartments coming onto the market to meet the demand you have identified. If there are too many apartments on the market, why would you want to develop more and create an oversupply and risk your money?

But if there isn’t enough supply on the market to meet the demand, you know it’s time to find that site to develop. Research can be rewarding.