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Demystifying the cost of developers in most areas
In addition to the cost of buying land, the developer's cost is divided into two parts. One part is hard costs, including construction costs of cement, steel, water pipes, etc., and the other part is soft costs, which include attorney fees, management costs, assessments, and environmental assessments. The cost is relatively flexible, and some projects take a short time from project establishment to start of construction. The cost may be lower. For some projects, such as Tridel's CIRCA in MARKHAM, it took 8 years from the beginning to the start of the project. So the soft cost is high. Generally speaking, the soft cost is the hard cost 30%-60%. The following table is the classification and proportion of hard costs.

It usually takes 3 to 5 years for a building from VIP pre-sale to completion and occupancy. For some real estates, it may take as long as 6-7 years for various reasons. During this period, the cost of building materials may rise substantially. This is a big risk for developers. Because developers generally do not rent a warehouse to store so many cement, steel bars and other construction materials. In order to reduce risks, general developers use the option hedging (HEDGING STRATEGIES) method to lock in the prices of major building materials such as cement and other products in the next few years.

The hard costs of CONDO developers in most regions vary greatly, depending on the quality and number of floors. The better the materials used, the more refined the craftsmanship, of course, the better the quality and the higher the cost. The more floors there are, the higher the building. The foundation needs to be dug deeper, and the foundation needs to be built stronger. More elevators, and therefore higher costs. The hard cost is also related to the topography, topography, and soil conditions of the LOT site, whether it is an open space or the need to demolish the old building, the design shape of the building, and many other factors. The developer’s hard cost ranges from 180/sq. ft. for low-rise buildings to very high-end buildings such as 400-450/sq. ft. for Four Seasons Hotel.

The developer’s soft costs include architectural design fees, government registration fees, insurance fees, attorney fees, brokerage fees, consulting fees, management costs, bank loan interest and bank miscellaneous fees, marketing expenses, various LEVIES and DEVELOPMENT CHARGES, evaluation fees, Land and environmental assessment, land survey fees, various PERMTS fees, land taxes, etc.

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