What Is Stakeholders?

 Stake = interest, share, right, claim.

 Real estate stakeholders are involved in these main activities:
- Development: The process of building new structures and modifying existing ones to
increase the property's value.
- Consultancy: The provision of data, analysis and advice for real estate buyers or
investors.
- Management: The operation, control, maintenance, and supervision of real estate and
physical property.
- Agency: The process of uniting the buyers and sellers or landlords and tenants in any
sale, tenancy or lease of real estate

 Stakeholders in real estate include:

- Landowners
 active landowners normally initiate the development.
 passive landowners can hamper the development.
 Three types of landowners.
o Traditional landowners: state & federal governments, religious
bodies, landed aristocracy (UK), etc. with main motive less on
economic but social, political and ideological imperatives.
o Industrial landowners: own land incidental to their main purpose,
e.g. farmers, manufacturers, extractive industries, retailers, etc. with
complex motives as they are restrained by the main purpose (their
main product), will not necessarily let go of land even though there
is economic benefit of developing.
o Financial landowners: own land as investment and will develop if
return is financially optimal.
- Con’t
 Landowners may act as developers directly, or in partnership with developers.
 The greater the number of landowners involved in a development and the
smaller their holdings, the more difficult it is to assemble a development site.
 Landowners’ readiness to develop may be constrained by land law
 E.g. Restrictions in interest and Express conditions in the land title.

- Developers:
 Private, public and PPP
 Can be of different sizes, type and compositions but main objective is
financial profit from the development.
 Either traders (selling the developed properties) or investors (retain
developed properties in their portfolio).
 Type of development may vary by specialising in particular types
(offices/retail/residential) or geographical locations.
  Some developers specialise in a development type but vary the location
nationally or internationally.
 The company’s policies will vary according to director’s interest or
expertise and perception of market conditions.
 In Malaysia, developers are controlled by various legislation, including
 Town and Country Planning Act 1976: planning conditions and planning
gains
 Building laws such as Street, Drainage and Building Act 1974 & Uniform
Building By Laws 1984
 Strata Titles Act 1985 and Strata Management Act 2013
 Housing Development Act (Control and Licensing) 1966: for housing
development only, license conditions.
 Public
 In general, the degree of involvement of public sector developers differs
from country to country, depending on government policy and economic
conditions.
 For instance, UK’s central government undertook little direct development.
In contrast, the Malaysian federal government have directly initiated
several mega projects over the years.
 The public sector’s intervention in the development process occurs
o where market forces failed to bring economic development in
targeted areas through development agencies such as UDA Holdings
Berhad (formerly Urban Development Agency).
o to facilitate development e.g. IRDA.
 Con’t
 On the other hand, both UK and Malaysian local authorities share similar
development undertakings i.e. developments for their own occupation or
community use and infrastructure provision.
 For local authorities, one objective of promoting economic development
activities is to promote development and investment.
o Part VII of Local Authority Act 1976 (Public Places) gives LA the power to
construct, control and care for public places under their LA area.
 Local authorities can act as catalysts to the development process by
supplying land in their area.
  PPP
 PPPs are long-term joint ventures between a public body and a private company
in delivering public goods and services.

 Objectives of PPP:

o To deliver significantly improved public services, by increasing quality

and quantity of investment.

o To release the full potential of public sector assets benefitting taxpayers

and the economy.

o To allocate benefits to stakeholders.

 PPPs combines the best of both worlds.

o Public sector’s resources.

o Private sector’s efficiency and expertise.

- Planners
 Similar to other Commonwealth countries, the Malaysian planning system is
based on UK planning system.
 Main purpose of planning is to ‘encourage development’ and to prevent
‘undesirable development’.
 Consideration of development applications is guided by statutory provisions and
government policy, which is compressed into development plans.
o Decisions will be based on development plans, government policy,
previous decisions and nature of application.
o Thus developers need to know the land use, density and design
standards – employ planning consultants.
- Con’t
 Prior negotiations with planners can ensure a successful application
o ‘planning agreement’ in terms of infrastructure or community facilities.
o Must be ‘reasonably’ related to the development proposed.
 Planning authorities may adopt different policies towards development.
o Planners in areas with low economic activities will become less stringent
and impose only minimal restrictions.
o Planners in areas with high economic activities will impose higher
standards and also slow down developments.
- Financial Institutions
 There are two types of money needed for development:
o Short term or ‘development finance’ to cover the costs during the
development process.
o Long term or ‘funding’ to cover the cost of holding the completed
development as an investment. (Otherwise, developers can find a buyer
for the completed scheme, repay the short term loan and realise the
profit).
 Financial institutions are normally pension funds, insurance companies and
banks with long term payment obligation to their clients.
o Their strategy would be to minimise risk and maximise future yields.
o Property provides an opportunity for long-term growth.
- Con’t
 Financial institutions’ involvement in real estate can be as
o Developer
o Financier
o investor.
 Their real estate portfolio should be a balance of different types and locations
 Pension funds and insurance companies normally look for buildings with widest
tenant appeal i.e. highest specs
o Can be less sustainable and over specified.
 Bank lending may be in the form of ‘corporate lending’ or lending against the
development project.
o Criteria will be developers’s track record and project’s good location and
viability.

- Building Contractors

 Building contractors are employed to construct the scheme, although

o a contractor may also be a developer: in this case a larger return to
compensate for higher risk.
o a developer may have in-house construction expertise.
 For ‘normal’ contractors
o the main objective is financial profit which depends on building cost and
length of contract.
o ‘Design and build’ contract means that the contractor also assumes a
design role that increases risk.
o They carry out specialist activity within the development process
 Cont’d
o Contractors will commence their activity after developer’s commitment.
o Thus, developers must ensure the capability and capacity of contractors
o Balance between lowest tender and quality of performance.
o But not too low so as to cause unreasonably low profit for contractors.
- Occupiers
 If the occupier is known early on, occupier’s requirements should be researched
at the beginning of the process.

 The building constructed based on occupier’s requirements can be very

specialised, especially for industrial users – difficult to dispose.

 Occupiers often see the buildings they occupy as an overhead incidental to their
main business activities

o Normally inadequately plan their property requirements.

o Will react to changes as they happen e.g. technology.

 Developers are taking more account of occupiers’ requirements

o trend towards energy efficient buildings.

- Professional team
 Each of these professional group are controlled by guidelines and bylaws from
their respective professional bodies.
 Includes
- Planning consultants -Engineers
- Valuers and estate agents -Project Managers
- Architects -Solicitors
- Quantity Surveyors

- Roles of Professionals
 Roles include:
o To negotiate with local planning authorities for planning permission.
o To become expert witness for the developer if planning application is refused.
o To advise developers on the most appropriate or valuable use.
- Governed by the Malaysian Institute of Planners.