Development Management Model: Benefits for Homebuyers & Developers

Torbit - May 27, 2024 - - 0 |

Srinivasan Gopalan, Chairman, Aris Unitern 

The Development Management Model (DMM) is a widely adopted tool or process in the real estate sector. This model provides a platform for a wide ecosystem of developers, both large and small, and creates long-term value for everyone involved.In this collaborative approach , as developers reduce their finabncial risks for project completion, homebuyers in turn get rid of development risks. Hence,it is a win-win for both developers and homebuyers.

Under this model, large developers collaborate with smaller or regional players to reduce financial risks associated with a project, effectively manage the development cycle, and exchange knowledge and expertise to maximize the potential of a project. To adopt this model, the involved parties or developers need to enter into agreements known as Development Management Agreements or DMAs.

When it comes to the adoption and practical application of DMM, it has been observed that many regional players are enthusiastically embracing the model. A recent report also highlights this trend, showcasing how regional developers from smaller cities are leveraging the rising prospects through DMM. These cities are helping them realize the growth potential due to extensive sectoral developments.  India’s urbanization rate grew by nearly 5 percentage points, reaching approximately 36 percent  today, significantly influencing real estate markets. While megapolis cities like Delhi-NCR, Mumbai, and Bengaluru have witnessed market consolidation and maturation, fast-emerging cities such as Hyderabad, Pune, and Ahmedabad have gained significant market shares. Today, these cities comprise the top 8 real estate markets in the country.

Looking ahead, the urbanization rate is projected to swiftly surpass 40% by the end of the present decade, presenting a strong and compelling case for newer cities to emerge. This trend is creating numerous opportunities for both larger, branded companies and smaller and medium-sized developers who are utilizing DMM as an effective tool to leverage the situation. In the process, local developers are able to harness the benefits of this model.

Under DMM, regional players contribute by assisting with land acquisition, providing local market intelligence, and mobilizing resources. Meanwhile, big developers offer operational and technical support, infuse capital and investment inflows, and oversee the project from its launch to final delivery. Another significant factor driving growth in the real estate sector is the flight to quality. Many global occupiers and investors are eager to explore the prospects of Tier-II markets, preferring assets that are compliant, relevant, and future-proof. DMM is helping meet these demands by enabling developers in emerging markets to adopt quality control standards necessary for sector maturity.

In terms of benefits to homebuyers, DMM is laying the groundwork for quality assurance by ensuring due diligence in terms of quality control. The primary concern for every homebuyer is to own property of the highest standards. Through DMM, homebuyers have the option to invest in properties that meet the best standards in terms of quality, safety, and regulations. Additionally, DMM enables developers to ensure timely project delivery, thereby reducing delays and inconveniences faced by homebuyers during property bookings. Furthermore, projects conceived and executed through the DMM model offer enhanced transparency, mitigate risks, and ensure that properties feature the best amenities, features, and facilities, thus enhancing the overall living experience for homebuyers.

Overall, the Development Management Model is acting as a key enabler for both larger, branded companies and smaller and medium-sized developers, thereby providing a significant positive boost to the real estate sector, particularly in emerging Tier-II markets. At the same time , it offers potential opportunity to homebuyers to invest in these markets and reap the benefits. As the future prospects are promising in these cities due to their great development potential, improving infrastructure, availability of talent, and excellent connectivity, DMM will become an important growth engine propelling the sector towards a new realm of expansion.

Leave a Reply