Question

Real estate is a business with operational functions. What are potential profit centers that are associated with real estate investment and development? Identify centers and how money is made. What about profit margins? How do you set up a business or set of businesses that capture revenues related to real estate?

Answer 1

Real estate is a business of construction of high rise building which is approved by the development authority. Builders purchase land from development authority and they take the land from the lease of 100 years so as to make high rise buildings for residential purposes and for commercial purposes like building malls, shopping complexes, and private shops. The builder also make schools, malls, and different shopping complexes so as to fulfill the need of people living in their residential buildings. A lot of profit is generated to builders in purchasing builder flats. Thus profit is directly proportional to the selling of the flats which are made by the builder. for eg., there is a famous builder named Gaur sons pvt.ltd. They initially made two building of 19th floor and by selling all the flats they earned a lot of profit and within 1 year their all flats were engaged with the people and they generated revenues and now they created a small city named as gaur city in which there is a mall, shopping complexes, many schools, playground, several parks. Their future plan is to make a hospital in their constructed city i.e.gaur city.

Builders purchase land on a lease basis and they give 75% of revenue to authority by selling the flats and authority gives some amount to the state government thus they make roads, flyovers, hospitals, malls, etc.

To capture revenue, builders make malls and in that, they give shopping spaces to several shop owners and other companies so that they can sell their products and by which revenue is generated and that revenue was given to builders in form of rent. So this is like a chain and revenue generation cycle is formed.