Author: Philip Goforth

Real estate development is a constantly evolving industry, and there are several key trends that are shaping the way that real estate projects are developed today. From shifting demographics to new technological improvements, these trends are steadily impacting how real estate projects are planned, executed, and marketed.

Philip E. Goforth of Missouri explores some of the most important trends that are shaping real estate development today, including fluctuating demographics, new construction technologies, and changing consumer preferences.

Shifting Demographics

One of the most significant trends impacting real estate development today is changing demographics. As millennials and baby boomers continue to enter the housing market, developers need to adapt their business models in order to accommodate these shifting demands.

Many developers are focusing on building multi-generational communities that cater to both millennials and baby boomers. These communities often include a mix of single-family homes, along with multi-generational housing options like apartment rentals, townhouses, and seniors’ residences. 

This kind of flexible development can help to meet the needs of various demographics while also promoting communal and social interaction between people of different ages, which is especially beneficial for those adults caring for their aging parents.

New Construction Technologies

In addition to shifting demographics, new construction technologies are also generating a major impact on real estate development. Innovations like 3D printing and advanced building materials are making it easier than ever for developers to create high-quality buildings in record time. 

For instance, several companies are now using 3D printing technology to design and build custom homes and office buildings. This allows developers to create unique, personalized structures that can be produced more quickly and cost-effectively than with traditional construction methods.

Similarly, new building materials are making it easier for developers to create innovative design features in their projects. Many architects are now using modern concrete mixes and fiberglass composites to create structures that are both durable and aesthetically pleasing.

Changing Consumer Preferences

Finally, consumer preferences are also extensively altering real estate development. As the housing market continues to evolve, developers need to be aware of shifting trends in home buying and rental habits in order to create projects that meet these changing demands.

One key trend that developers need to be aware of is the growing popularity of rental properties. As millennials continue to delay home ownership and opt for short-term rentals instead, many developers are focusing on building multifamily units and apartment complexes in order to capitalize on this trend.

At the same time, there has been a rise in “tiny homes” as well as other small-scale housing options. These types of homes are often designed with functionality and flexibility in mind, making them especially appealing to younger homebuyers or those who are looking for a more minimalist lifestyle. 

Final Thoughts

Overall, understanding the key trends impacting real estate development today is essential for developers who want to stay ahead of the curve and create successful projects. Whether you’re focusing on multi-generational communities, new construction technologies, or shifting consumer preferences, it’s important to stay informed about the latest trends in order to create innovative and successful real estate developments.

In the world of real estate, technology is rapidly changing how developers do business. New advances in construction techniques are allowing developers to build bigger and faster than ever before. Additionally, developments are progressively incorporating more smart home technologies and other modern features, helping to make properties more attractive to buyers.

While these changes may make it seem like this is a new age, experts are predicting that we can expect even more dramatic shifts in the coming years. Philip E. Goforth of Missouri discusses below some of the hottest real estate development technology gaining popularity in the new year.

Prefabricated Construction

One of the biggest trends in real estate development technology is the rise of prefabricated construction. Prefab construction utilizes modern manufacturing techniques to construct building components off-site, before being assembled on-site at a later time. 

This allows developers to minimize labor costs and speed up construction timelines, while also ensuring high quality construction.

Smart Home Technologies

Another emerging trend in real estate development is the incorporation of smart home technologies, which allow developers to offer future homeowners more convenience and connectivity. 

Some examples of these are smart entry systems that recognize residents and automatically open the doors, advanced security features that enable homeowners to monitor their properties remotely, and smart lighting systems that automatically adjust to match the time of day.

Augmented Reality

In addition to incorporating smart home features, many developers are also taking advantage of augmented reality (AR) technology. AR integrates digital information using real-world environments in real-time, allowing users to interact with virtual objects as if they were real. 

Examples of AR in real estate development include virtual showrooms where potential buyers can tour a property from the comfort of their own homes, and interactive maps that allow homebuyers to explore different neighborhood amenities.

AI-Enhanced Analytics                                                                                  

Another rapidly evolving technology impacting real estate development is artificial intelligence (AI), which is enabling developers to collect and analyze large amounts of data more efficiently than ever before.

With the help of AI-enhanced analytics, developers can better understand the market trends and make smarter decisions about where, how, and what to build. In particular, predictive analytics enable developers to more accurately estimate future property values based on past sales data, which can be a huge advantage when planning new developments.

What New Technology Means for Development

While these real estate development technologies are still evolving, it is clear that they will continue to have a significant impact on the industry in the years to come.

For developers who are able to stay ahead of the curve and incorporate these new technologies into their work, there could be major advantages in terms of cost reduction, time savings, and market insights. However, for those who are unable to keep up with these changes, the future may be much more challenging.

Looking ahead at the start of 2023 and beyond, it will be interesting to see how these real estate development technologies continue to evolve and impact the industry as a whole.

Final Thoughts

Moving into the future, it is clear that development technology will continue to evolve and play a key role in shaping the real estate industry. As a developer or someone simply interested in the latest trends, it will be interesting to watch these changes unfold over the coming years.

A real estate development model typically contains two sections — Deal Summary and Cash Flow Model. The former involves calculating the economy and profitability of the project, while the latter portion calculates revenues, net present value, and the internal rate of return. 

Philip E. Goforth of Missouri explains that both segments are necessary to ensure professionals construct a well-organized, perfectly planned real estate development model.  

The Deal Summary

The Deal Summary begins with listing the project’s schedule assumptions and expected property stats. The following items should be included:

Schedule Assumptions

• Date of transaction
• Sales start date
• Construction start and end date
• Number of months for transaction
• Percentage sold at sale commencement
• Units sold per month
• Percentage closed at construction completion
• Units closed per month post

Property Stats in Square Feet

• Gross and net site area
• Deductions
• Density (FSR)
• Number of units
• FSR gross buildable area (GBA)
• Construction GBA
• Average unit size
• Net salable

Development Costs

Once the statistics are listed, professionals move on to detailing the assumptions for development costs regarding the total amount, price per square foot, and cost per unit.

Depending on the project type, development costs will include building costs, land costs, hard and soft contingencies, marketing, servicing, and more.

Utilizing the property stats listed in the first stage, developers can complete the following table with relative ease:

Development Costs
	Total $	$/Unit	$/SqF
Building Costs
Servicing
Hard contingency
Soft contingency
DCCs
Consulting ; warranty
Finance/Bank costs
Marketing
Overhead
Finance – Interest
50% commissions
TOTAL

Sales Assumptions

The third Deal Summary step requires determining the project’s revenue. To do this, developers conduct market research and base their per-square-foot sale price on their findings. 

Using that figure as the revenue driver to calculate total, per-unit, and per-square-foot sales, they deduct sales commissions and warranty to arrive at the project’s net proceeds. 

Financing Assumptions

Here, project owners should aspire to assume the loan-to-cost percentage, land loan, and interest rate. 

Before determining the loan amount, the total development cost is required. Since the interest expense isn’t completed until the Cash Flow Model stage, professionals come back to these calculations following the second real estate development model portion.

The Cash Flow Model

After the Deal Summary, the final part commences — Cash Flow Model. It involves five sections, as per the following:

1. Revenue build-up — Professionals endeavor to conclude the townhome closings and absorption. The latter is the available homes sold during a certain duration. The former is the number of homes closed after complete construction. 
2. Expenses — Development expenses include pre-construction spending, land cost, and construction spending. The numbers are already included in the Deal Summary Development Costs Assumptions section. 
3. Costs to fund and repay capital — The former is the project cash flow’s shortfall which requires financing (if applicable). If the total net revenue is larger than the development costs, positive proceeds repay borrowed capital. 
4. Financing — Loan balances, repayments, accrued interest, and draws are all calculated here. None of the ending balances should be more than the maximum loan amount. 
5. Free cash flow and IRR — Finally, the project’s levered free cash flows and IRR are calculated