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Real estate development vs. real estate-based project


Learn more about these two types of ventures and their differences

Do you know the differences between a real estate venture and a real estate-based venture?

Here at SiiLA Insights, we are always talking about the types of properties, categories, movements, and other terms in the sector, but that can seem a little complex for those who are not familiar.

During one of our SiiLA ACADEMY classes, students learned a subject of extreme importance for beginners to get a kick out of the Real Estate market. And that's what we're going to talk about next!

Real estate-based enterprise (EBI)

These assets remain the property of the original investor or another specialized manager without the property being sold to the end user. In other words, real estate-based projects are usually corporate offices, logistics warehouses, and shopping malls.

In addition, the concept of Multifamily (residential for income) also joins the category, a recent product in Brazil. These ventures, which generate income, are based on the exploitation of the property itself. The value derived from operating performance is called Net Operating Income (NOI).

In the case of EBIs, the operating horizon is long-term, profitability is considered homogeneous, and market value is stable.

Real estate development

These are residential developments aimed at selling autonomous units or the building as a whole. Its main performance metrics are sales velocity, PSV (General Sales Value), and absorption.

This type of business typically starts six months after the project's launch. In this way, the developer is able to raise money and reduce the distance between spending x revenue.

The operating horizon of this type of enterprise is medium-term, its profitability is heterogeneous, and its market value is unstable.

If you missed the registration period and want to be notified about future SiiLA ACADEMY classes, sign up for the waitlist! We look forward to seeing you in the next class!

Want to learn more about real estate market terms? Access the main concepts here!

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