Property development or real estate development is one of the most promising areas in the economic development of Pakistan. In the recent turmoil that Pakistan is going through, real estate development is also facing plenty of challenges. In this blog, we will discuss all these challenges. But before getting to know what are the challenges in property development? First, we need to understand what is meant by Property development or real estate development.
Property development activities
Property development or real estate development is the process that increases the property’s worth. How? By designing new creative structures and by implying significant improvements in the existing ones. It is not a simple one-step process, but many significant processes compile together to create a worth selling property. Such as proper land acquisition is the first step. Record and management of financial and other resources and their regulation throughout the process is another important step. Designing which must fulfil the requirements, and well-maintained construction is the key step. Then good marketing via proper channels is also included. And ultimately the selling of a developed property, which can be residential or commercial is the outcome of the property development. Just as Park View City Islamabad is a well-developed property that can be an ideal place for you to live.
By reading the above processes you must have gained a concept of real estate development. This process is not that simple and there are many challenges the property development is facing right now. Let’s have a look!
Top 5 challenges in property development
1. Misjudgment of the real estate market
In any corporate market, results are not always predictable. With experience and better planning one can reduce the risk of failure, but chances are always there. The same is true for the real estate market, as we can’t predict its trends accurately.
Despite having experience of many years, sometimes developers overestimate the worth of their property. Or they may not take their competition in the market seriously. This can cause them severe loss. Similarly, expense underestimation can also be a great fault from the developer’s side. As it can cause a high overrun in budget and a rise in financial pressure. Economic market trends in the real estate market also keep on changing so they must not be neglected as well.
We can say even a minor misjudgment in real estate market trends can lead to severe consequences. It is one of the biggest challenges faced by property development.
2. Inappropriate site area
Challenges regarding location can be another big hurdle in developing a worth buying property. Choosing a desired location is the first step in property development. So a good site that meets the requirements of the customers in terms of rates, accessibility, and all other basic needs is quite ideal.
To choose a better site, developers need to understand;
- The needs of their target customers
- Their competition in the market
- Affordability or estimated budget
- Design appropriateness
- Environmental risks
- The practicality of the plan.
Other than location, construction-related challenges are also hard to deal with. Unforeseen issues most commonly happen in the construction area that can cause delays, increase financial burdens, and ultimately produce less desired output.
So, Good demographics, appropriate and organized planning, and well-maintained construction practices are very important factors contributing to worthy property development.
3. Incompetent designing and engineering
Significantly remarkable expertise is required in designing and engineering a property development project. If there are changes in the design or if the engineer’s plan is changed, then it may lead to a delay in the project. Budgets are also sometimes overrun because of such issues. Not only this, but any incompetency in design or engineering work can affect the functionality, safety, and overall quality of the project. Which in turn leads to customer dissatisfaction and thus failure of the project.
4. Increasing inflation
Not only in Pakistan but worldwide inflation keeps on hitting new heights. This is becoming a big challenge in real estate development globally. Real estate is a big market and so it needs a huge budget and well-organized and well-planned financial resources.
In the recent economic instability, developers can’t rely on a single finance partner, but they need to find multiple finance resources. Only that way they can deal with sudden fluctuations in inflation. They need to estimate the accurate cost, and they should have the potential to predict the future change in economic trends. In this era of inflation, with limited financial resources a good developer needs;
- To rely on multiple resources
- Maintain and regulate those resources throughout
- Take good notice of any changing economic trends
Only then they can face these property development-related challenges efficiently.
5. Lack of resources
Lack of resources is a big challenge that property development is facing. It is not only common in Pakistan but worldwide this is a big obstacle in property development activities. In Pakistan and other developing countries, where they lack financial resources. On the other hand in Great Britain, they lack human resources, as this field is not so attractive for the people there.
But in Pakistan, Labor wages and worker compensations are the bare minimum making it difficult for them to make their ends meet. This is the reason that their workforce delays their job or doesn’t pay attention to details, ultimately it all leads to not-so-good quality end product.
So, overall for better development of any real estate property, things required are
- Optimum financial sources
- Appropriate and cost-effective land
- Excellent location with proper infrastructure
- Well-experienced, skilled, and adequate labor force
- Good quality construction material
- Effective design
- Good marketing strategies
Conclusion
All in all, developing a high-end property is not a simple task and involves numerous challenges. These challenges are mainly related to the misjudgment of real estate market trends. Developers need to get expertise and have the potential to interpret market trends efficiently. Wrong location with not-so-good infrastructure is also a major challenge that needs to be assessed beforehand. Incompetent regulation of plans and less quality construction material issues are also common. An expert and adequate labor force is also a must for real estate development. Lack of these resources can be a big challenge for developers of real estate. To meet the quality standard of the competitive market, the whole real estate project team needs to consider all these challenges beforehand. And they should be well prepared for all these obstacles throughout the process of property development.
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Reviewed By Mr.Rizwan Sajjad
