ACTORS IN THE REAL ESTATE GAME
In the real estate game, you have quite a few actors that all contribute to a projects realization.
They contribute with different skills and are relevant in different phases of the process from idea to realized property.
- Real estate developer
They are the ones initiating the project and putting all the pieces together from financing through design to selling or holding the property.
- Financial institution/ bank
They are the ones loaning capital to real estate developers in exchange for an agreed upon interest rate and a payment plan, as real estate developers seldom finance their project with a 100 % of their own equity.
- Private/ institutional lender
This can be several different actors. It can be a rich private individual, a crowdfunding source, a fund, who can help the real estate investor fund some of their project or all of it based on an interest rate and established payment plan.
They are the ones who determine what kind of given project can be realized based on the specific regulations set out from the development plan in the given area. They set the framework for what kind of project can be developed.
They space plan and design the building in accordance to the brief created by the developer. They in some instances also help to investigate the sites constraints both in accordance to the development plan and shape of site.
They make sure that the building lives up to the building code regulation both concerning structural properties (making sure the building stands) and in accordance to building climate, which refers to lighting and heating etc.
They apply their legal skills in reference to transactions and possible disputes, but also in analyzing which possible laws or restrictions the plot of land entails in the due diligence analysis.
- Construction company
They take the material from the architect and the engineer and build the property. They usually employ a series of sub-contractors to do specific tasks in the construction process.
- Real estate agent
They make sure that the building is sold or leased and are relevant in the marketing of the new building as a product in the space market.
- Asset manager
When the property is constructed, they manage the tenants, the building and the grounds of the properties on a day-to-day basis.
This was a simple overview of the different actors in the real estate game, which are all essential in creating the build environment as we know it today and as we will know it in the future.
We are going to go through a diagrammatic example of how the relationship between the actors could be in a simple development project. In a later article we will go through the different phases more in-depth.
The process is divided up into three phases *simplified.
- IDEA & PLANNING- pre-construction
In this phase the real estate developer has seen an opportunity to create a new property.
The developer contacts private lender/ institutional lenders and bank(s) regarding financing.
The developer contacts architects and engineers to design the property.
The developer contacts the municipality about his plans with the development.
The developer contacts one or several real estate agencys to gain knowledge about the market and about branding for the property.
- EXECUTION- construction
The developer hires a construction company to build the property.
- FINISHED PRODUCT- post-construction
The developer hires an asset manager if the development is to be held in his or her own portfolio; otherwise, it is sold off to a professional asset manager, who then takes over the building into their portfolio.
Thank you for reading.