The journey of a project developer in the real estate industry – Ralf Schmitz – Exceptional Homes

However, project development does not necessarily mean that a company executes real estate projects on behalf of external clients, and the degree of responsibility that project developers assume for the property can also vary greatly. Based on the investment horizon and also the financial responsibility, project developers can therefore fall into one of three categories:

Service developers are service providers who take on real estate project development and implement construction projects on behalf of investors or builders without acquiring the land themselves or bearing the financial risk for the construction phase. The German Trade Regulation Act also refers to these project developers as construction supervisors. ^[1].

Investor developers are project developers who use real estate as a long-term investment. Both new construction and the redevelopment of existing properties serve to increase the value of their property as the finished residential units can be rented out at a better price. Selling a fully developed property is entirely possible for investor developers – this strategy is also referred to as “fix and flip” – but for the most part, the aim is to generate passive income by renting it out.

Trader developers develop real estate as properties for sale. In doing so, they not only take on the project development phase, but also the role of the builder in the strict sense of the word: they commission all the companies involved in the construction in their own name and for their own account. As a result, the trader developer or “builder” guarantees the project with its own reputation and assets until the ready-to-occupy residential units are handed over to their buyers. ^[2].

For potential property buyers, the most important difference between these three business models is the relationship between the project developer and their clients – and the service associated with it.

If the aim of an investor developer is to resell a property as part of a fix-and-flip strategy, they usually do not have a specific buyer in mind. Interested parties are therefore often faced with a fait accompli: The property is either already fully developed or the construction phase is at least so far advanced that there is little room for individual touches. For this reason, the purchase of completed properties – no matter how exquisitely designed they may be – is not the first choice for many clients in the luxury segment.

“The feeling of being your own boss and designing an apartment or villa according to your own desires and ideas is a core element of the luxury experience. Most clients who do not want to acquire an exclusive property for investment purposes only, but also want to enjoy it themselves, therefore prefer a form of project development that offers them more freedom of design.” As Managing Director and Head of Project Development at RALF SCHMITZ, Dr Axel Martin Schmitz has been working on real estate projects for many years, from planning and construction to the handover of the ready-to-occupy residential units. What his clients particularly appreciate about working with an experienced developer is the dialogue as equals.

“From a purely legal point of view, RALF SCHMITZ acts as a builder as we commission all construction work and are also liable for all the financing until a project is completed. Nevertheless, we see ourselves as a service provider and our clients as the actual builders. However, we differ from the classic property developer in one central aspect: we combine specialist knowledge with service quality. We turn our clients’ ideas and desires into extraordinary real estate concepts that spark joy even during the construction phase. This is because we completely separate the design privileges of the builder from the financing risk and the organisational work.”