The term "developer" appears frequently in news about urban redevelopment, but surprisingly few people understand the full scope of the role accurately. In this article, we explain from an industry professional's perspective the definition of a real estate developer, how it differs from a general contractor, and the main areas of responsibility.
What is a developer?
A developer (developer) is a company that undertakes land and urban development projects. From parks and infrastructure to large commercial buildings, resort development, residential land preparation, and urban redevelopment, developers comprehensively handle a wide range of real estate and construction-related projects. The English word "developer" is translated as "developer" or "land development contractor."
How is a developer different from a general contractor?
- Developer: Acquires land and plans and leads development projects. It is the "project owner" that earns revenue by selling or leasing completed buildings
- General contractor: A "comprehensive construction company" licensed for specified construction business. It is the "builder" that oversees and manages individual contractors
The relationship between the two is often not a simple ordering-and-contracting arrangement. More often, it is a partnership in which they work together as joint project participants to advance development.
What are the main responsibilities of a developer?
1. Site acquisition
The starting point of development is land acquisition. Information is gathered through networks with government bodies, trading companies, and real estate firms, and the land is acquired after profitability is carefully assessed.
2. Marketing and pricing
Sales prices and tenant rents are set based on market research and surrounding market rates. This is one of the most important responsibilities because it directly affects the profitability of the entire project.
3. Construction management
Even after construction is outsourced to a general contractor, the developer's in-house building division remains responsible for tasks such as quality checks and schedule control.
4. Legal and administrative management
Specialized departments are established to manage a large volume of documents, including sales contracts, personal information, and government procedures.
5. Sales
Sales activities for customers are carried out through brochures, Web, and advertising. Smaller developers also often outsource sales to external agents.
Who are Japan's major developers?
The representative "big three" are Mitsui Fudosan, Mitsubishi Estate, and Sumitomo Realty & Development. Within the distribution structure of real estate information, the proprietary networks held by developers are a core source of competitive advantage in the market.
How are developers related to real estate investors and property management companies?
Properties developed by developers are sold after completion to REITs, institutional investors, and individual investors, and their subsequent operation and management are handled by property management companies. Leasing operations in rental property management depend on how well property value is maintained and enhanced.
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Frequently Asked Questions (FAQ)
Q1. Are developers and real estate companies the same thing?
No, they are different. A real estate company is a broad term that includes brokerage, management, buying, and selling, while a developer is a company that handles land development, construction, and sales as an integrated business.
Q2. What skills are needed to work for a developer?
Broad knowledge is required in areas such as marketing, legal affairs, architecture, and finance. Major companies typically hire for general career-track positions and then assign employees to individual departments after joining.
Q3. What is a small-scale developer?
It is a small or mid-sized development company that handles apartment or detached-house projects on the scale of several buildings. These firms tend to be community-based and strong in local land information, but they are generally behind major firms in financial strength and brand power.
Q4. What does a developer's revenue model look like?
The main source of revenue is "profit from the sale of developed properties." Profit is generated by selling at a price that exceeds costs such as land acquisition and construction expenses.
