The property development industry is both complex and diverse: complex, in that there are many agencies, public and private, large and small, undertaking development in a variety of organizational forms and legal entities; diverse, in that it involves a vast number of businesses across a wide range of sectors, having different aims, objectives and modes of operation.
The property development industry is also risky, cyclical, highly regulated and lengthy in production. In addition, it comprises three major groups: consumers, producers, and providers of public infrastructure. This seeming imbroglio thus requires close consideration and understanding, so that the process of property development can be managed in a way that optimizes the benefit to all concerned. The point has been made more eruditely by one of the leading thinkers in the field of real estate development, as follows:
Unlike many mass production industries, each real estate project is unique and the development process is so much a creature of the political process that society has a new opportunity with each major project to negotiate, debate and reconsider the basic issues of an enterprise economy, i.e. who pays, who benefits, who risks, and who has standing to participate in the decision process. Thus, the development process remains a high silhouette topic for an articulate and sophisticated society. The best risk management device for the producer group, which is usually the lead group in the initiation of a project, is thorough research so that the development product fits as closely as possible the needs of the tenant or purchaser, the values of the politically active collective consumers, and the land-use ethic of the society.
The growing intricacy and sophistication of the property development industry has led to the need for a deeper understanding of public policy, physical planning, municipal regulation, market research, the legal framework, site appraisal, economic evaluation, financial arrangements, contractual procedures, building design, construction techniques and marketing strategy dimensions of a development scheme, together with a much more professional approach towards the management of projects in terms of time, quality, cost and asset value.
To facilitate the study and understanding of property development, several models of the development process have been devised since the mid-1950s.