Ground up development

Ground-up development is simply the development of a property from the ground up. It is the most opportunistic real estate investment strategy which also involves greater risk and requires longer potential hold periods. Ground-up developments can take place after demolishing an existing vacant building or constructing on its“scraped” portion or developing on raw land. 

Ground-up development has four phases:

  1. Pre-development: The pre-development stage determines the viability of a project. Few important steps of this phase include:

ü Site selection and land procurement

ü Civil engineering work

ü Environmental evaluations

ü Reasoning (if required)

ü Site plans, authorizing, and construction plans

ü Ground condition evaluations.

  1. Development: After the completion of pre-development work and a site is considered purchasable, the governing requirements are fulfilled, after which the development process begins. The development phase includes most of the site work essential before the beginning of construction, including:

Ø Surveying

Ø Land grading and excavation

Ø Site utilities including water/sewer or well/septic

Ø Stormwater collection, drainage, and water systems

Ø Heavy pull roads, rights of way, concrete, and paving

  1. Construction: Once a site has been properly developed, construction commences. By this stage, it is assumed that significant unknown risks have already been recognized and resolved during the pre-development and development phases. The construction procedure is managed by a developer and general contractor and is directed by the sanctioned construction drawings established earlier in the project.
  2. Delivery/Closeout or Operation/Management: After the completion of the construction and the fulfillment of all the local government formalities, the building can assume operation.

Ground-up development possibly yields the greatest returns in any real estate investment strategy.

Some of the risks that entail ground-up development include pre-development risks, vertical construction risks, financial risks, and other operational complications.

This help page and the information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction.

Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors.