Plots
Development
costs for developing a property
Developing a property is a complex and costly undertaking. Before you start your construction project, it is essential to know the exact costs involved. Do you need support with financing? Contact us for a non-binding consultation.
The development is a crucial step for the buildability and value enhancement of your property. Thorough planning is essential to make the most of your budget.
The municipalities play a central role in development, both in planning and implementation. Take advantage of funding opportunities and negotiate instalment payments to reduce the financial burden.
Take into account the special requirements for infrastructure when dealing with commercial properties, such as power supply and broadband internet, to ensure long-term success. Strategic planning can increase the value appreciation by up to 20%.
The development of a plot is a crucial step that determines the success of your construction project. But what does development actually mean, and why is it so important? This guide provides you with a comprehensive overview of the costs involved, the legal framework, and the possibilities for saving on property development costs. A well-informed plan and an understanding of the individual cost elements are key to optimising your budget and avoiding unexpected expenses.
Development refers to the necessary measures to make a plot ready for construction. This usually includes road construction, the installation of water and sewer lines, power supply, and connection to the telecommunications network. Development is not only a prerequisite for buildability but also an essential factor in the valuation of a plot. A developed plot is generally significantly more valuable than an undeveloped one.
It's important to understand what is included in development and what is not. While the aforementioned infrastructure measures clearly fall under development, the construction of buildings and interior finishing do not. Similarly, the costs for purchasing the plot itself are separate items. A clear distinction helps you realistically assess the actual development costs and plan your budget accordingly. Early involvement of an expert can be very advantageous.
The legal basis for development in Germany is enshrined in the Building Code (BauGB). In particular, § 123 BauGB regulates the municipality's development obligation. Accordingly, the municipality is obliged to carry out the necessary development measures to ensure the buildability of the plots. This obligation serves the public interest and is intended to ensure orderly urban development. Knowledge of property law is essential in this context.
The municipalities play a central role in development. They can either fulfil their development obligations themselves or transfer them to private companies or property owners through development contracts. Such contracts regulate the details of the development measures, cost distribution, and responsibilities. There is contractual freedom, but also a certain development compulsion to avoid hindering the development of building land. The municipality must ensure that the development is in line with urban planning goals.
For commercial properties, special requirements often apply to development. Compared to residential areas, commercial areas generally require a higher power supply, a broadband Internet connection, and good transport links. Emission control also plays an important role, to avoid disturbing residents with noise or pollutants. The municipality must consider the specific needs of businesses when planning the development, as Dold Immobilien describes. This can lead to higher development plot costs, which are, however, essential for successful commercial use.
The development costs consist of various elements that can vary depending on the type and scope of the development measures. Road construction is usually the largest cost factor. It includes the costs of building roads, paths, and squares, including material costs, labour costs, and planning costs. Also included are the costs for street lighting and signage. The quality of roads and paths has a direct impact on the attractiveness of the property and the quality of life for residents.
Another significant cost factor is sewerage and water supply. This includes the costs for laying sewage and drinking water pipes, connection fees, and ongoing costs for water supply and sewage disposal. A functioning sewerage and water supply system is essential for the hygienic conditions and quality of life in a residential or commercial area. Therefore, having precise knowledge of the development costs is indispensable.
The power and telecommunications supply also significantly contributes to the property development costs. This includes the costs for providing electricity connections and telecommunications lines, possibly including the costs for expanding the fibre optic network. A reliable power supply and fast internet connection are essential today, both for private households and businesses. Not all costs are passed on to the residents. There is a distinction between "assessable" and "non-assessable" costs. Only assessable costs may be passed on to property owners, while non-assessable costs must be borne by the municipality.
The calculation and allocation of development costs is usually based on a specific allocation key. There are various allocation keys that can be applied depending on the municipality and the type of development measures. Common allocation keys include the area scale, the usage scale, and the floor area scale. The area scale takes into account the size of the plot, the usage scale considers the type of use (e.g. residential, commercial), and the floor area scale considers the number of storeys. Each allocation key has its advantages and disadvantages, and the choice of the appropriate key depends on the specific circumstances.
An important aspect of allocating development costs is the so-called benefit to adjoining property. This term describes the advantage a property gains from development. The benefit to adjoining property is usually assessed through appraisals or comparative values. The higher the benefit to the adjoining property, the higher the share of the development costs that the property owner must bear. Assessing the benefit to adjoining property can lead to disputes between the municipality and property owners, particularly when the valuation is subjective.
To illustrate the calculation of development plot costs, case studies and calculation examples are helpful. These examples show how the costs for individual development measures are determined and allocated to property owners. Different plot sizes and uses are taken into account. The examples clearly demonstrate that development costs can vary significantly depending on the location and condition of the plot. An early estimation of development costs is therefore advisable.
The financing of development plot costs can represent a significant financial burden for landowners. There are various ways to finance the development. One option is financing from personal funds. This is usually the most cost-effective option, as there are no interest charges. However, it is not always possible to cover the entire development costs from personal funds. Another option is external financing through loans. In this case, interest charges accrue, increasing the total costs. It is important to carefully weigh the advantages and disadvantages of the different financing options and consider the tax implications.
There are various funding programmes and grants available to finance development costs. These programmes are offered by federal, state and local governments. The funding conditions and application procedures vary. It is worthwhile to inform oneself about available funding opportunities early on and to submit applications on time. The Auctoa experts can help you find the appropriate funding programmes.
Another way to reduce the financial burden of development costs is to arrange instalment payments or deferment with the municipality. Many municipalities are willing to accommodate landowners and give them the opportunity to pay the costs in instalments or defer them for a certain period. In such cases, interest is generally charged, although this may be lower than with a bank loan. The terms for instalment payments and deferment are negotiable and depend on the financial situation of the landowner and the municipality.
The development of commercial properties places specific demands on the infrastructure. Companies require a reliable power supply, fast broadband internet connection, and good transport links to remain competitive. Logistics also plays a critical role, especially for businesses that produce or distribute goods. The local authorities must take into account the specific needs of businesses when planning development and ensure that the necessary infrastructure is available. This may lead to higher development land costs, which, however, can pay off in the long term when businesses succeed and create jobs.
Flexible usage concepts and mixed-use developments can enhance the attractiveness of business parks and increase adaptability to market developments. For instance, coworking spaces, green buildings, and e-commerce logistics centres can be integrated into commercial areas to meet diverse needs and avoid vacancies. The municipality should consider flexible usage concepts in development planning and establish the framework for mixed-use. This can result in higher occupancy of commercial areas and better economic viability.
Heritage protection and regulations can represent additional cost factors in the development of commercial properties. Particularly for historic buildings or within listed ensembles, heritage protection regulations must be observed. This can lead to higher planning costs, additional approval procedures, and restrictions on building design. It is important to inform oneself early about the applicable heritage protection regulations and incorporate the costs of compliance into the development land costs. The discussion on gutefrage.net highlights the complexity of such situations.
Sustainable Development and Green Buildings are becoming increasingly important. Environmentally friendly concepts and technologies can help to reduce the environmental impact of development and improve the quality of life for residents. For instance, eco-friendly materials can be used, rainwater harvesting systems installed, and green roofs created. The energy efficiency of buildings is also crucial. The municipality should focus on sustainability and eco-friendliness when planning developments and create incentives for Green Buildings.
Digitalisation and Smart City concepts offer new opportunities to improve the efficiency of development and enhance the quality of life in cities. For instance, smart grids, water meters, and traffic management systems can be used to optimise energy and water consumption and reduce traffic. Citizen participation can also be enhanced through digital platforms. The municipality should emphasise digitalisation and Smart City concepts in planning developments and actively involve citizens.
E-commerce significantly impacts the requirements for logistics areas and their development. Companies need large, modern logistics centres near urban areas to quickly and efficiently deliver goods to customers. The municipality must consider the specific needs of e-commerce companies when planning developments and provide the necessary infrastructure. This can lead to a higher demand for commercial properties and an increase in property prices. The financing of commercial properties is therefore an important issue.
The development is a crucial factor for the successful development of land. Meticulous planning and financing are essential to keep the costs of land development under control and to avoid unexpected expenses. The municipality plays an important role in the development, both in planning and in the implementation of measures. Landowners should early on inform themselves about legal frameworks, support opportunities, and financing options to optimise the development.
The development will continue to evolve in the future to meet the demands of a changing world. Sustainability, digitalisation, and flexibility are becoming increasingly important. Municipalities must develop innovative concepts to make development more efficient, environmentally friendly, and citizen-friendly. Citizen participation will also play a greater role in increasing the acceptance of development measures. The special situation of isolated locations should also be considered.
Are you planning the development of your land? Find out everything about the costs involved, hidden fees and how you can save money through proper planning and funding. Development is a crucial step that determines the success of your construction project. A sound planning and understanding of the individual cost elements are key to optimising your budget and avoiding unexpected expenses. Contact us today to learn more about our services in property valuation and development. Find out now!
The development of plots is a complex subject, encompassing many aspects. Careful planning and consultation are essential to keep costs under control and successfully implement the project.
Summary of Key Points
Development costs are a significant factor in land development and can account for a substantial part of the total investment. The legal framework is complex and diverse. Careful planning and consultation are essential to optimise costs and successfully implement the project.
Importance of Careful Planning and Consultation
Early involvement of experts, such as architects, engineers, and lawyers, is advisable to consider all relevant aspects and avoid mistakes. Consultation with the local council can also be helpful to understand specific requirements and regulations. It is important to take all relevant aspects into account, such as technical requirements, environmental regulations, and funding opportunities.
Outlook on Future Developments
Sustainability and digitisation will play an increasingly important role in the development of plots in the future. Adapting to climate change will also be essential to protect plots from the impact of extreme weather events. It is advisable to address these developments early and consider them in planning the development.
Are you planning the development of your plot? Auctoa supports you with comprehensive valuation reports and consulting in the real estate sector. We help you keep costs under control and successfully implement your project. Contact us today for bespoke advice!
The Federal Office for Building and Regional Planning (BBR) offers information on land development and spatial policy.
The Federal Ministry for Digital and Transport provides information on infrastructure and transport.
German Academy for Urban and Regional Planning (DASL) offers insights into land development strategies and spatial policy.
What are typical development costs for a commercial property?
The development costs for a commercial property include road construction, sewage systems, water supply, and electrical and telecommunication connections. The exact costs vary depending on the location, size, and specific requirements of the business.
What role does the municipality play in property development?
According to § 123 BauGB, the municipality is obligated to ensure development. They can carry out the development themselves or contract private companies through development agreements.
How are development costs allocated to adjoining property owners?
The allocation of development costs is typically based on a specific distribution key, such as the area standard, usage standard, or gross floor area standard.
What funding options are available for property development?
There are various funding programmes and grants from the federal government, states, and municipalities. It is advisable to obtain early information on the available funding options.
What is the difference between chargeable and non-chargeable costs?
Only the chargeable costs are allowed to be allocated to the property owners, whereas the non-chargeable costs must be borne by the municipality.
What specific requirements apply to the development of commercial properties?
Commercial properties generally require higher power supply, broadband internet connection, and good transport links. Noise protection also plays an important role.
How does heritage protection influence development costs?
Heritage protection and regulations can be additional cost factors, especially for historic buildings or in protected ensembles. It is important to be informed early about the applicable regulations.
How can sustainable concepts influence development costs?
Sustainable development and green buildings can save costs in the long term, for example by using environmentally friendly materials, rainwater utilisation systems, and green roofs.
