Life cycle of a property- the period of time during which the property exists as a physical object.
The life cycle of real estate acquired for commercial purposes, from the position of the owner of the ϶ᴛᴏth real estate, can be repeated with the new owner of the ϶ᴛᴏth same real estate until the end of the life of the object. The life cycle is constantly subject to certain patterns, according to G. Harrison - ϶ᴛᴏ the period of physical, economic, chronological and the remaining period of economic life.
By the deadline physical life of the object includes the time when it is possible to live or work in an existing building or structure. This indicator can be standard, calculated, actual and increase due to improvement of conditions or due to modernization. If the real estate object is demolished, then the term of physical life ends.
By the deadline economic lifeᴏᴛʜᴏϲᴙt period during which the object can be used, receiving - at ϶ᴛᴏm profit, these improvements contribute to the value of the object. If the improvements made do not make a certain contribution to the value of the property due to the fact that it is obsolete, then the term of its economic life ends at ϶ᴛᴏm.
Under chronological age understand the period that has passed from the day the property was put into operation until the date of its valuation.
Life time
The effective age is based on the assessment of the appearance of the real estate object, its technical condition, economic factors that affect the total value of the object.
Effective Age- ϶ᴛᴏ age, ϲᴏᴏᴛʙᴇᴛϲᴛʙ, which corresponds to a certain physical state of the object and takes into account the possibility of its implementation.
The typical service life is called the standard service life.
Standard service life— ϶ᴛᴏ service life of buildings or structures, which is defined in the regulations.
Under remaining economic life buildings understand the period from the date of its appraisal to the end of its economic life. This period is used by an appraiser to estimate future income. The term of the remaining economic life of the object is increased by its modernization or repair.
All the above stages of the life cycle and the life of real estate objects are interconnected. The owner of real estate, in order to implement adequate measures that will ensure an increase in the profitability of the property and its safety, should take into account the presence of real estate in a certain (any) stage of the life cycle.
Real estate life cycle stages
So real estate objects during the time of its existence are subject to economic, physical, legal changes and go through the following stages of the life cycle:
- formation - ϶ᴛᴏ construction, i.e. the creation of a new enterprise, the purchase or allocation of a land plot;
- operation - includes operation and development, i.e. expansion, reorganization or reconstruction;
- cessation of existence - ϶ᴛᴏ demolition, natural destruction or liquidation.
Real estate life cycle stages:
1. Formation of the concept of the project and the choice of the option of using the ϲʙᴏbodny land plot. In the ϶ᴛᴏt period, the choice of the best and most efficient use of the land is made. The choice of use case is completed by the development of a specification for the design of improvements.
2. Improvement design. At the ϶ᴛᴏm stage - on the basis of the technical specifications for the design - a project is developed with the preparation of documentation necessary for obtaining permits and preparing the land, as well as laying communications, building buildings and planting new plantings.
3. Manufacturing (erection, construction) of improvements. During the implementation of the project by contractors, all the physical characteristics of the object are almost completely changed, with these changes fixed in the inventory and cadastral documents.
4. Appeal (purchase and sale, donation, leasing, etc.) with the transfer of property rights or with the appearance of an encumbrance on ϶ᴛᴏ right. At the ϶ᴛᴏ stage, operations are carried out with the property.
5. Use (use) of the object for its intended purpose with technical and operational maintenance. At the ϶ᴛᴏm stage of the life cycle, the manager (or professional management company) organizes the rational use by users of the consumer potential of the facility.
6. Modernization: overhaul, reconstruction, restoration of improvements with a possible re-profiling (change in functional purpose) of the object. By the way, this stage begins at the moment when the object in its current state can no longer meet the modern needs of users or (and) if its operation becomes economically inefficient. At the ϶ᴛᴏ stage, at least a major overhaul is carried out without changing the planning solution and functional purpose, but with the elimination of removable physical wear and tear and functional obsolescence.
7. Disposal, demolition of improvements, landfill or recycling of materials. The life cycle ends with the demolition of improvements at the end of their economic life. The management company prepares proposals for the appointment of terms and an economically feasible method for the demolition of buildings, taking into account the possibility of selling structural elements and materials of the liquidated buildings and communications.
State educational institution of higher professional education
St. Petersburg Institute of Trade and Economics
Subject "Economics of Real Estate"
"Features and life cycle of the property"
Completed by: Andreyanova E.V.
Gr. 1410, Faculty of TEF, 4th year
Scientific director
Pirogova O.E.
St. Petersburg, 2010
Introduction
Chapter 1. The concept of real estate and its object
1 Real estate definition
2 Real estate object
Chapter 2. Features and life cycle of the property
1 Features of the property
2 Life cycle of real estate as a physical object
3 Life cycle of real estate as an economic object
4 Life cycle of real estate of an enterprise as a property complex
Conclusion
Bibliography
Applications
Introduction
Real estate objects occupy a special place in the system of social relations, since economic activity and priority relations of people in all spheres of their activity are directly or indirectly related to them.
Today, it is real estate objects that seem to be the central link in the system of the country's market economy. And this is understandable - a real estate object is not only a special product, but at the same time capital that generates income, and the basis for the provision of services in order to conduct effective business activities.
Real estate economics is a system of relationships that arise in the course of real estate transactions.
Knowledge of the discipline is necessary in the preparation of modern specialists, since any professional is currently faced in practice with the processes taking place in the real estate market.
The main goal of the guidelines is to provide students with knowledge about the nature of real estate objects, legal aspects of real estate economics, basic operations and approaches to real estate appraisal, features of the real estate market and types of entrepreneurial activity on it.
1. The concept of real estate and its object
1 Real estate definition
The concept of "real estate" is inseparable from another concept - "property".
Property - a set of property, i.e. subject to monetary value, legal relations in which this person (natural or legal) is located.
Property belonging to any natural or legal person is divided into:
asset: a set of things belonging to a person by the right of ownership or by virtue of another real right; a set of rights to other people's actions (for example, debt property);
liability: a set of things belonging to other persons, but temporarily in the possession of this person; the totality of the obligations of the person.
Historically, since the time of Roman law, property has been divided into movable and immovable.
According to Art. 130 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation) “immovable things (real estate, real estate) include land plots, subsoil plots, isolated water bodies and everything that is firmly connected with the land, that is, objects whose movement without disproportionate damage to their purpose impossible, including forests, perennial plantations, buildings, structures.
Immovable things also include aircraft and sea vessels subject to state registration, inland navigation vessels, and space objects. Other property may also be classified as immovable by law.
Modern Russian legal practice has established a number of signs by which a physical object can be classified as real estate:
strong connection with a certain land plot (impossibility of moving an object without disproportionate damage to its purpose);
completeness in terms of the possibility of using it for its intended purpose;
· certified (officially registered) belonging to a specific owner - the state, a subject of the Federation, a municipality, an individual or a group of individuals;
the possibility of physical separation of the real estate object and real estate (i.e. the presence of clearly defined physical boundaries of the real estate object);
functional independence of the property (is it possible to use this property separately from other objects, or its functional purpose involves the partial use of other properties);
the presence (or absence) of easements and other restrictions on the rights of use.
Things not related to real estate, including money and securities, are recognized as movable property. Registration of rights to movable property is not required, except in cases specified in the law.
2 Real estate object
"Property" contains two bases - physical and legal. The physical basis of this concept is based on the material component of real estate, namely: buildings, structures, land plots, subsoil, etc. All that "is an object that is connected with the earth in such a way that its movement without disproportionate damage to its purpose is impossible."
The legal part lies in the field of realization of the rights arising from transactions with real estate and its use.
Due to depreciation, the property loses its liquidity - "the possibility of implementing any method of turning real estate into money" is the legal component of the concept.
Each property has its own cadastral number and is subject to a process called “property inventory”. It is characterized by "inventory" - the history of the emergence and change of the property. All of the above applies to the legal part of the definition of real estate.
The objects of civil rights include things, including money and securities, other property, including property rights; works and services; information; results of intellectual activity, including exclusive rights to them (intellectual property); intangible benefits.
2. Features and life cycle of the property
1 Features of the property
Having a land plot as an integral part, all artificial buildings (real estate objects) have generic features that make it possible to distinguish them from movable objects. This:
Stationarity, immobility. The sign is characterized by a strong physical connection of the property with the earth's surface and the impossibility of its movement in space without physical destruction and damage, which makes it unsuitable for further use.
Materiality. It should be noted that real estate always functions in natural-material and cost forms. The physical characteristics of a property include, for example, its size and shape, nuisances and hazards, environment, access roads, utilities, surface and subsoil, landscape, etc. Together, these characteristics determine the utility of the property, which forms the basis of real estate value. However, it does not determine value by itself. Any object has value, having to some extent such characteristics as suitability and limited supply. Limited supply must be present to create significant value. Social ideals and standards, economic activities and trends, laws, government decisions and actions, natural forces influence people's behavior, and all this, interacting with each other, creates, maintains, changes or reduces the value of real estate. It should also be noted here that real estate is one of the few commodities whose value is not only almost always stable, but also tends to increase gradually over time.
The durability of real estate is practically higher than the durability of all other goods, except for certain types of precious stones and products made from rare metals.
For example, according to the building codes and regulations in force in Russia (SNiP), residential assignments, depending on the material of the main structures (foundation, walls, ceilings), are divided into 6 groups with standard service lives from 15 to 150 years.
The duration of the circulation of the earth with its correct use is infinite, and the violation of its correct exploitation will lead to irreparable losses.
In addition to the main generic features of real estate, it is possible to single out private features, which are determined by specific indicators depending on the type of real estate.
It is practically impossible to talk about two identical apartments, two identical plots, two identical buildings, because they will necessarily have differences in location in relation to other real estate objects, to infrastructure and even to cardinal points, which shows heterogeneity, uniqueness and the uniqueness of each property.
Real estate has a high economic value. This is due to the fact that it is intended for long-term use and is not consumed during use. As a rule, it has a constructive complexity that requires high maintenance costs.
In addition, the property always has its own functional purpose. It can be industrial and non-productive. In case of production purpose, the real estate object directly or indirectly participates in the creation of products, the performance of work, the provision of services. In non-production - provides conditions for living and serving people.
Real estate always acts as an object of long-term investment. Most often this is due to the fact that the acquisition of a property in parts is not possible, because a significant amount of capital is required to invest in a property. In addition, if we talk about the profitable side of the matter, cash investments in real estate are costs with a fairly high payback period.
It should be noted that some types of real estate can be transferred to movable property. For example, forests and perennial plantings are, by definition, real estate, while harvested wood is already movable property.
It should be noted that equipment located in buildings and structures (heating, water supply, sewerage, electrical equipment, elevators, gratings, second metal doors, etc.) refers to movable property. But since it has become an integral part of the property, in the case of a transaction for this object, it is necessary to describe in detail all the movable property included in the real estate (this is especially true for property subject to seizure during the transaction).
Often, real estate transactions can transfer a set of rights and interests that are not part of the property. These may be the rights of lease, preemptive acquisition or other interests (servitudes).
So, real estate includes the most valuable and generally significant fixed assets, and real estate such as land and subsoil are of great not only economic, but also strategic importance for any state at all times.
For example, in the pre-capitalist period, land was the only significant source of wealth for each person individually, as well as for the state and society as a whole.
Real estate in any social system is an object of economic and state interests, and therefore, for this category of property, the obligatory state registration of rights to it has been introduced, which allows you to identify the object and the subject of law, because the connection between the object of real estate and the subject of rights to it is invisible, and the transfer of real estate by physical movement is not possible.
2 Life cycle of real estate as a physical object
Acting as a physical object, real estate is a commodity, an object of property, a business, and goes through various stages and processes in each of its incarnations.
The life cycle of a property (physical) is the period of time during which a property exists as a physical object. The life cycle of a real estate object consists of the following stages (phases):
Formation of the concept of the project and the choice of the option of using a free land plot. During this period, the choice of the option of the best and most efficient use of the land plot is carried out, taking into account the peculiarities of its characteristics and all the properties of the environment. Based on the analysis, the most productive use case is selected from legally permitted, physically feasible, economically viable and financially feasible. The choice of use case is completed by the development of a specification for the design of improvements.
Improvement design. At this stage - on the basis of the technical specifications for the design - a (specialized organization) develops a project with the preparation of the documentation necessary for obtaining permits and preparing the land plot (with fixing the shape and size, with the removal of unnecessary natural and artificial vegetation, with the drainage of reservoirs) , as well as the laying of communications, the construction of buildings (structures) and the planting of new plantations. Acceptance of the project from the design organization should be carried out with the participation of the management company that participated in the development of the technical assignment for the design.
Production (erection, construction) of improvements. During the implementation of the project by contractors, all the physical characteristics of the object are almost completely changed, with these changes fixed in the inventory and cadastral documents. During the construction of improvements and as a result of fixing the new status of the object, as a rule, the characteristics of the environment that are related to the created object also change.
Circulation (purchase and sale, donation, lease, etc.) with the transfer of a property right or with the appearance of an encumbrance on this right. At this stage, operations are carried out with the object and the change in the legal fate of the latter is registered by the state. When buying and selling an object, the subject of ownership changes. When land and/or improvements are leased or rented out by the owner (or, on behalf of the owner, by the management company), the rights of use (and, possibly, possession) are transferred to another entity with the appearance of an encumbrance of the right of ownership.
Use (use) of the object for its intended purpose with technical and operational maintenance. At this stage of the life cycle, the manager (or a professional management company) organizes the rational use by users of the consumer potential of the facility. Over time, the characteristics of the object undergo changes, because. improvements physically wear out and become functionally obsolete, which is exacerbated by changes in the situation in the economy and in the external physical environment, leading to additional, so-called external obsolescence.
During operation, technical examination and current repair of individual elements of improvements are periodically carried out without stopping the use of the facility as a whole.
Modernization: overhaul, reconstruction, restoration of improvements with a possible re-profiling (change of functional purpose) of the object. This stage begins at the moment when the object in its current state can no longer meet the modern needs of users or (and) if its operation becomes economically inefficient. At this stage, at least a major overhaul is carried out without changing the planning solution and functional purpose, but with the elimination of removable physical wear and tear and functional obsolescence.
If the analysis of the best and most efficient use of land and improvements, performed at this moment, shows the feasibility of a partial change in the functional purpose of the improvements, then the latter are reconstructed with a change in the layout of part of the premises. Naturally, at the same time, the functions of overhaul of the elements of improvements that retain their original functionality are also provided.
If the analysis of the use of the object in its current state shows the need for a complete replacement of its functional purpose, then the reconstruction may be accompanied not only by a radical change in the layout, but also by the extension or superstructure of existing buildings and the development of the free part of the land plot.
Disposal, demolition of improvements, landfill or recycling of materials. The life cycle ends with the demolition of improvements at the end of their economic life. The management company prepares proposals for setting a timeframe and an economically viable method for the demolition of buildings, taking into account the possibility of selling structural elements and materials of the liquidated buildings and communications (the volume of liquidation costs is minimized).
Obviously, some phases are repeated at different stages of the life cycle. So, for example, the idea of a project to create a new facility can arise both at the stage when a piece of land is completely free, and at the stage of the need for reconstruction, partial demolition or completion of buildings. The circulation phase can be realized repeatedly during the life of an object, and the circulation moments determine the time boundaries of the periods that form the basis of the so-called investment cycles.
3 Life cycle of real estate as an economic object
real estate property economic
The life cycle of a real estate object is subject to certain patterns and includes the period of economic and physical life
The term of economic life, which determines the period of time during which the object can be used as a source of profit. The economic life ends when the improvements made no longer contribute to the value of the property.
A typical physical life span is the period of real existence of a property in a functionally usable state before its demolition. It is determined by regulatory documents. The physical and economic life of real estate objects are of an objective nature, which can be regulated, but cannot be canceled.
Lifetime - the period of time when the object exists and you can live or work in it.
From the point of view of the period of life of the property, such terms are distinguished as:
ü Effective age, reflecting the age of the object, depending on the appearance, technical condition.
ü Chronological (actual) age, corresponding to the period of the object in operation since its commissioning.
ü The remaining period of economic life used for the purpose of assessing the object by an expert appraiser and making up the period from the date of assessment to the end of the economic life of the object.
The life cycle of real estate as an economic object is as follows:
Creation
State registration of real estate - in the Russian Federation - a legal act of recognition and confirmation by the state of the emergence, restriction (encumbrance), transfer or termination of rights to real estate in accordance with the Civil Code of the Russian Federation.
possession and use; change of owners. Possession - in civil law - the authority of the owner; the actual possession of a thing, creating for the owner the possibility of direct influence on the thing.
Development
Deterioration of consumer properties of real estate
End of economic life
4 Life cycle of real estate of an enterprise as a property complex
An enterprise as an object of rights is recognized as a property complex used for entrepreneurial activities.
The enterprise as a whole as a property complex is recognized as real estate.
The enterprise as a whole or part of it may be the object of sale, pledge, lease and other transactions related to the establishment, change and termination of property rights.
The structure of the enterprise as a property complex includes all types of property intended for its activities, including land plots, buildings, structures, equipment, inventory, raw materials, products, rights of claim, debts, as well as rights to designations that individualize the enterprise, its products, work and services (company name, trademarks, service marks), and other exclusive rights, unless otherwise provided by law or contract.
The life cycle of an enterprise as a property complex:
Creation or privatization of an enterprise
State registration of property rights (state, municipal, private, shared ownership). State registration of rights to an enterprise and transactions with it must be carried out in a special manner, due to the legal specifics of this object. The main feature of the enterprise is the possibility of including in its composition land plots and other real estate objects located in different territories, as well as the possibility of excluding real estate from the composition of the enterprise.
Formation or reaching the design capacity
Optimal Functioning
Change of ownership, private and total
Reorganization, reformation, reconstruction, merger, acquisition
Bankruptcy (optional step)
Liquidation (optional step). The liquidation of the property complex is auctions and other mechanisms for the sale of property (including real estate) of a bankrupt organization in accordance with the regulatory legal provisions of bankruptcy proceedings.
Termination of functioning: natural non-restorative cessation, physical destruction, conscious demolition.
Conclusion
In any social structure, real estate occupies a special place in the system of social relations, with the functioning of which, in one way or another, the life and activities of people in all spheres of business, management and organization are connected. It is real estate that forms the central link of the entire system of market relations. Real estate is not only the most important commodity that satisfies the various needs of people, but at the same time capital in real form, generating income.
Real estate is the basis of the country's national wealth, which is massive in terms of the number of owners. Therefore, knowledge of real estate economics is necessary for successful entrepreneurial activity in various types of business, as well as in the life of any family and individual citizens, since real estate ownership is the primary basis for freedom, independence and a decent existence for all people.
Bibliography
1. "Economics of real estate." Textbook. Goremykin V. A., Moscow, 2008.
. "Economics of real estate." Tutorial. Asaul A.N. Karasev A.V., Moscow, 2009.
Ozerov E. S. Economics and management of real estate. St. Petersburg: Izdestvo "MKS", 2006 - 422 p. - ISBN 5-901-810-04-X
Ignatov LL Economics of real estate. Teaching aid. - M.: Publishing house of MSTU im. N. E. Bauman, 2008. - 168 p. - ISBN 5-7038-2174-6
The life cycle is a complete sequence of real estate existence processes from commissioning (from creation) to termination. In theory and practice, four types of cycles are distinguished: business cycle, product life cycle, type of business and enterprise as a property complex. the duration of the cycle is affected by periods of production, physical and obsolescence, the capital value of the facility, operating conditions, market conditions and other factors. For real estate valuation, it is of interest to consider 2 life cycles of real estate:
1. The life cycle of real estate (goods) as a physical object.
2. The life cycle of real estate as an object of ownership.
The life cycle of real estate (goods) as a physical object consists of 11 stages:
1. Pre-investment stage (opportunity analysis, justification).
2. Creation, formation (design, construction).
3. Commissioning.
4. Possession and use.
5. Functional, economic obsolescence.
6. Physical wear.
7. Capital repairs or reconstruction.
8. Deterioration of consumer properties.
9. Change of functionality.
10. End of economic life.
11. Termination of existence (natural destruction, demolition).
At stages 3 and 11 of the life cycle of real estate, a procedure for state registration of rights is required.
The life cycle of real estate as an object of ownership can be decomposed into 10 stages:
1. Acquisition (purchase, construction, inheritance).
2. Possession and use in a certain period.
3. Object management.
4. Extraction of profit, satisfaction of needs.
5. Disposal of property and real rights to the object.
6. Multiple change of owners, owners, users.
7. Changing the functional purpose of the object.
8. Termination of property rights (sale, nationalization, requisition).
9. The end of the economic life of the object.
10. Repetition of the previous cycle or construction of a new, modified one.
At stages 1, 6 and 8 of the life cycle of real estate, a procedure for state registration of rights is required.
Real estate objects in the course of their existence are subject to physical, legal and economic changes. As a result, each immovable thing (except land) goes through the following enlarged stages of the life cycle:
Formation - construction, creation of a new enterprise, acquisition (purchase, allocation, etc.) of a land plot;
Operation - functioning and development (expansion, reconstruction, change of activity, reorganization, etc.)
Change (possibly repeated) of the owner, owner or user;
Termination of existence - demolition, liquidation, natural destruction.
The first, third and fourth stages provide for the state registration of the fact of the creation or liquidation of the object, as well as the change of ownership.
The life cycle of real estate is subject to certain patterns and includes economic, physical, chronological and the remaining period of economic life.
Economic Lifespan is the period of profitable use of the object, when the improvements made contribute to the value of the property. Good repair, refurbishment and optimization of conditions increase, while poor maintenance shortens the economic life of the object. It ends when the improvements no longer contribute to the value of the item due to its general obsolescence.
physical life span- this is the period of the real existence of an object in a functionally usable state before its demolition (destruction). It can be normative, actual, calculated (forecast) and increase due to modernization and improvement of conditions.
Effective Age based on an assessment of the appearance and technical condition of the building. This is the age corresponding to the actual preservation of the object, its condition at the time of the transaction, evaluation. The effective age may be greater or less than the chronological age.
Chronological age is the period from the day the facility is put into operation until the date of the transaction or valuation.
Remaining economic life building is calculated from the date of assessment (analysis) until the end of economic life. Repairs and refurbishments extend this period.
The physical and economic lifetimes of buildings are objective, which can be regulated but cannot be cancelled. All stages of the life cycle and life span are interconnected, and when one of them changes, the others change accordingly.
As a physical object, it is a sequence of processes of the existence of a real estate object from conception to liquidation (disposal). The life cycle of material objects consists of the following stages: idea - birth - maturity - aging - death.
2. Development of the property complex (new construction, acceptance on the balance sheet).
3. Liquidation of the property complex - auctions and other mechanisms for the sale of property (including real estate) of a bankrupt organization in accordance with the legal provisions of bankruptcy proceedings.
The life cycle of real estate as property from the point of view of the owner is repeated many times, with each new owner, until the end of the economic or physical life of the object. Based on the trinity of categories - material (physical), legal (legal) and economic - the life cycle of a property can be divided into three stages. Each stage includes certain activities and actions of the owner.
The life cycle of a real estate object is subject to certain patterns and includes the period of economic and physical life.
1. The term of economic life determines the period of time during which the object can be used as a source of profit, and ends when the improvements made cease to contribute to the value of the object.
2. Typical physical life - the period of real existence of the property in a functionally usable state before its demolition. It is determined by regulatory documents.
The physical and economic life of real estate objects are of an objective nature, which can be regulated, but cannot be canceled.
3. Life time - a period of time when the object exists and you can live or work in it.
From the point of view of the life span of the property, the following periods are distinguished:
1. Effective age, reflecting the age of the object, depending on the appearance and technical condition.
2. Chronological (actual) age corresponding to the period of the object in operation from the moment of its commissioning.
3. The remaining period of economic life used for the assessment of the object by an expert appraiser and constituting the period from the date of assessment to the end of the economic life of the object.
1.3. Life cycle of real estate objects
The life cycle of a real estate object as a physical object is a sequence of processes of the existence of a real estate object from conception to liquidation (disposal). The life cycle of material objects is usually divided in the following order: idea-birth-maturity-aging and death.
The stages of the life cycle of a real estate object are called differently: pre-project-design-construction-operation-closure.
1. Pre-project(initial)stage includes: analysis of the real estate market, selection of a property, development of a project strategy, investment analysis, preparation of initial permits, attraction of credit investment funds.
2. Design stage includes: development of a financial scheme, organization of financing, selection of an architectural and engineering group, design management.
It is obvious that profit is not formed at the first two stages, since they are of a motivational nature. The main tasks of this period are to reduce the duration of these stages, improve the consumer qualities of real estate objects and, most importantly, minimization of operating costs at all stages of the life cycle of a property. Unfortunately, it must be recognized that the concept of life-cycle costing is more often discussed than practiced. The essence of this concept is that when making a decision to build a property, the owner "dooms" himself to a set of costs that are inextricably linked with the ownership of the property. These costs are known as the cost of owning property. Life cycle costing can be used, for example, to compare two ways to achieve the same goal - build a property or rent it, etc. At the project level, life cycle costing can be used, for example, in order to decide whether, during the finishing process in the corridor, a decorative board should be fixed along the walls or the walls should be painted annually, etc.
A rationally built system for calculating costs, taking into account the entire life cycle of a real estate object, also makes it possible to compare actions that ensure different life spans of the elements of a real estate object. It should be noted that the savings that can be achieved as a result of the implementation of any project are difficult to identify, even more difficult to quantify and very difficult to document.
The costs of implementing large construction or renovation projects are quite high, so much attention must be paid to controlling all types of costs. But in most cases, the economy is misunderstood.
Often, the owner (developer) simply seeks to minimize the total amount of initial investment, because he has little idea of how decisions made at the design or construction stage will affect the costs of operating the property in the future.
Decisions made by the owner on the construction (acquisition) of a real estate object only on the basis of an analysis of the initial price (acquisition, construction, rent), for the most part, are not the best and often turn out to be simply wrong. Of course, this task (calculation of costs taking into account the entire life cycle of the property) is quite complicated, but it is worth making an effort to solve it, because as a result, the foundation will be laid for the formation of annual budgets for the entire period of operation of the property in the future.
3. Construction stage consists in choosing a contractor, coordinating the conduct of construction work and monitoring the quality of construction, cost estimates and expenses. At this stage, real evidence of the compliance of the object under construction with the requirements of the real estate market segment, due to the logic of the life cycle, appears. At this stage, the tasks of increasing the share of investments of potential consumers are solved, since the growth in the volume of offers and profits indicates a fairly wide market recognition.
The current situation in the economy forces the participants of investment projects to tighten the work schedules for the implementation of a specific construction project, so that the results of the project begin to benefit in the chosen direction of entrepreneurial activity as early as possible. Therefore, construction work begins already at the design stage (even before the full completion of the development of the project), which requires a high degree of coordination of actions of all project participants. Such an organization of construction leads to savings (from 5–10%) due to a decrease in the cost of capital (reduction in the volume and terms of borrowing) due to an earlier commissioning of a real estate object, as well as to the emergence of fundamentally new business solutions. At this stage, a significant reduction in costs is achieved with the optimal choice of the form of construction management, namely project management or a general contract.
One of the types of construction management, widespread in countries with developed market economies, is project management. This type of management covers the entire period of construction - from the selection of the purpose of the construction project to its operation. In the course of project management, the following tasks are solved:
Efficient use of investments and control over this process;
Development of project documentation;
Implementation of the requirements of project documentation during the construction process;
Construction quality control.
To manage projects with strict implementation conditions, special structures are created headed by construction managers. World practice shows that this form of management makes it possible to achieve overall savings in construction costs up to 10%, increases the efficiency of control over all types of costs, and also reduces the project implementation time.
The organization of construction in the form of project management is very common in countries with developed market economies and has prospects in our country, especially when implementing multi-storey construction projects, since a unified management of the design-build cycle reduces the project execution time, thereby achieving overall savings (up to 10%) of funds and conditions are created for effective control over all types of expenses.
In domestic practice, the contracting principle of construction of facilities is more common, when, under a construction contract, a construction contractor undertakes to build a certain facility on the instructions of the customer or perform other construction work within the prescribed period, and the customer undertakes to create the necessary conditions for the contractor to perform the work, accept their result and pay the stipulated price.
Usually, the customer chooses one construction organization to be the general contractor, concludes an agreement with it for the entire range of works, giving it the opportunity to conclude subcontracts for the entire range of works. During the construction of large facilities, the customer (developer) may appoint several general contractors, each of which is responsible for a specific area and works under the direct control of the customer's representatives.
In domestic practice, architectural and design organizations stepped aside from quality control of construction and installation works. Designers limit themselves to only periodic visits to the construction site in order to make sure that all their recommendations are taken into account during the implementation of the project, therefore, quality control of work lies with the customer (developer). In addition to quality control in the implementation of large projects, external experts are involved (in the absence of in-house specialists) to perform the following tasks: estimating the cost of work, monitoring compliance with the schedule for the implementation of individual operations or a set of works, accounting and auditing, legal issues, interaction with regulatory authorities and representatives local authority.
The order of acceptance of objects into operation is a fairly highly regulated regulatory process of documenting.
4. Stage of operation of the object real estate involves: operation, facilities, their maintenance and repair. The operation of real estate objects, being a multidimensional function in the management system, includes the following areas: operation of premises equipment, material accounting, fire protection and safety, communications management, waste disposal and recycling, relocation and relocation, changes and reconstruction, elimination of emergency situations, ensuring maintenance and repair, installation of furniture and security of the facility.
There is no single definition of the concept of “premises equipment”, but they are based on: heating, ventilation and air conditioning systems; electric lighting equipment and heat supply, water supply and sanitation systems; mechanical and electrical vertical and horizontal transport systems (elevators, escalators, etc.).
Recently, due to the threat of terrorism and the growth of crime, the role of the security function has increased. Therefore, an increasing number of organizations are striving to provide a safe working environment. As a rule, security systems (including fire protection) and technical security are developed and implemented taking into account the specific needs and functional purpose of real estate objects.
Communications management is a function determined by the essence of the property. The telephone and telephone infrastructure are increasingly being used to provide facsimile, teletext, data transmission and reception services. The potential of these services and their quality are being improved through the spread of fiber-optic communication. In addition to telephonization, computer and Internet technologies (network communications of computers), automation of workplaces are developing.
Electronic or information security is supplemented by the provision of information protection on electronic devices, partly in software, as well as replenishment of the organization's data bank.
The process of disposal of hazardous waste during the operation of real estate objects includes a number of complex management tasks from recycling, for example, fluorescent (mercury-containing) lamps, to the elimination of hazardous waste. As a rule, the property manager enters into an agreement with organizations that specialize in their burial and disposal. Most waste recycling procedures consist of separate collection and resale or destruction. Waste is classified by type, divided into categories: paper, glass (sheet, bottles), scrap metal (steel, cast iron, aluminum), foam plastic, motor oils, tires, etc.
During the operation of a property, it is often necessary to perform work to change the property or its components. Practice shows that a new employee wants to improve the workspace or redesign office space, but there are a number of rules that allow you to effectively manage change in favor of the organization:
Space - there is no need to move the wall by 0.5 m to satisfy someone's ambitions;
Materials - there is no need to use precious wood parquet where laminate can be used;
Design principles - do not build cabinets where you can do freestanding;
Planning - do not redevelop the office just because one of the employees wants to sit in front of the window;
Engineering - not to install five outlets on each wall, but to ensure proper access to electrical and information inputs.
Emergencies during the operation of a property can occur at any time, because no one is immune from fire, flooding, vandalism, or even force majeure (flood, earthquake, etc.). There is no single form of emergency response plans; in each specific case, a person responsible for a particular object is appointed and an instruction is developed according to which he must act.
When eliminating the consequences of accidents, you should:
Check all steel structures for heat damage;
Detect damage caused by combustion products;
Check all communication and office equipment and other systems of the property subject to corrosion and moisture; check the wiring and other communications for the presence of condensate (in cold weather); check boiler equipment;
Clean systems of mold and other harmful materials in case of their formation, etc.
Furniture installed in accordance with the construction project of the facility is an equal element of the property, therefore it is necessary to carry out its inspection and repair in accordance with the preventive maintenance plan.
Service and repair. As practice shows, the vast majority of property owners do not allocate sufficient funds for the maintenance and repair of buildings and structures. The reasons for this are many, from focusing on short-term goals to underestimating the consequences of such a move, but the costs of correcting these consequences almost always exceed the cost of maintenance and repair work.
Service- works performed to ensure the normative life of real estate objects: they do not lead to an increase in its value, but prevent deterioration and failure of individual elements. The purpose of maintenance is warning.
Repair - work to restore damage or deterioration of the property to a normal operational condition. The purpose of repair is restoration.
Repair work is divided into small and large. Minor repairs, the duration of which is 1-2 days, are carried out to ensure the normal operation of the property. It does not extend the life of the object and does not increase its value. Major repairs (more than 2 days) extend the life of the property, but do not increase its value.
Replacement- this is the process of replacing the fixed assets included in the real estate object with a similar unit. The subject of replacement is an independent object of fixed assets, which replaces worn-out or obsolete components of fixed assets.
The main purpose of servicing the property is to ensure the use of the property for its intended purpose; it consists of specific works:
Daily cleaning (to maintain a presentable appearance);
Timely elimination of minor defects on the property;
Production of major repairs based on the minimum life cycle costs;
Development of measures to reduce and optimize the total cost of operation and maintenance;
Rational functioning of utilities (while ensuring reliability) serving the property;
Constant control and analysis of the costs of maintenance and repair of the facility;
Drawing up work schedules and monitoring their implementation;
Reporting on the property as a whole and on equipment.
In practice, there are:
Repair as needed;
Periodic repairs (for example, replacement of a soft roof after 10 years);
Preventive maintenance of equipment;
emergency service;
Repair (replacement of windows).
Operational (during the entire useful life of the property);
Functional (for personnel involved in maintenance, repair, etc.);
For utilities and cleaning of the building;
For the repair and restoration of the property (if the service life of the property has expired).
In addition, it is necessary to take into account the costs of changes and improvements, defined as the cost of owning a property.
5. Object closing stage- complete elimination of its original and acquired functions, the result of which is either demolition or a qualitatively new development. At this stage of the life cycle of a property, significant liquidation costs are required. These costs are the result of owning the property. If the property receives a new qualitative development, then the cost of change refers to the cost of ownership per new function.
Similar to the life cycle of real estate objects, it can be divided into stages and the life cycle of a property complex:
1. Formation of the property complex (regulatory registration of the results of transactions with real estate objects and rights to them: purchase and sale, contribution to the authorized capital, rent, leasing, etc.).
2. Development of the property complex (new construction, acceptance on the balance sheet).
3. Adaptation of the property complex is ensured through the implementation of various investment and development projects, flexible lease, both in terms of obtaining and temporary leasing of real estate. At these stages, a significant place is occupied by the operation, repair and maintenance of real estate, as well as insurance, depreciation policy, interaction with accounting systems and property taxation. This stage may include transactions for the sale of certain properties.
4. Liquidation of the property complex is auctions and other mechanisms for the sale of property (including real estate) of a bankrupt organization in accordance with the regulatory legal provisions of bankruptcy proceedings.
The life cycle of real estate as property, from the point of view of the owner, is repeated many times with each new owner until the end of the economic or physical life of the property. Based on the trinity of categories - material (physical), legal (legal) and economic, the life cycle of a real estate object can be divided into three stages (Fig. 1.6).
Every stage includes certain activities and actions of the owner.
The life cycle of a real estate object is subject to certain patterns and includes the period of economic and physical life (Fig. 1.7):
Term economic life, which defines the period of time during which the object can be used as a source of income. The economic life ends when the improvements made no longer contribute to the value of the property.
2. Typical physical life span- the period of real existence of the property in a functionally usable state before its demolition. It is determined by regulatory documents. The physical and economic life of real estate objects are of an objective nature, which can be regulated, but cannot be canceled.
3. Lifetime- the period of time when the object exists and you can live or work in it.
From the point of view of the period of life of the property, such terms are distinguished as:
1. Effective Age, reflecting the age of the object, depending on the appearance, technical condition, etc.
2. Chronological(actual) age, corresponding to the period of the object in operation from the moment of its commissioning.
3. Remaining economic life, used for the purpose of assessing the object by an appraiser and making up the period from the date of assessment to the end of the economic life of the object.
Rice. 1.7. Lifespan of a building or structure
The duration of the physical life of a property (other than land), economic and effective age depends on wear and tear - a process that has the force of the laws of nature. There are three types of depreciation: physical, moral and external (economic) (Fig. 1.8).
Physical deterioration is the deterioration of the technical and economic parameters of an object, which is due to its wear during operation and under the influence of the environment. Distinguish - removable depreciation, when the object can be physically restored and it will be economically justified, and irreparable depreciation, when the property cannot be restored. The reasons for the occurrence of physical wear and tear can be different: normal operation of the object (physical wear of the 1st kind); natural disasters, accidents, violations of the rules for the operation of the facility (physical deterioration of the 2nd kind). It should be borne in mind that during the operation of a real estate object, the deterioration of its technical and economic indicators occurs constantly, but an instant deterioration in the technical characteristics of the object (breakage of electrical wiring, fire, etc.) can also occur.
All types of physical deterioration, as a rule, lead to negative consequences. First, certain consumer and operational characteristics of real estate and other technical devices are deteriorating. Secondly, with the age of the property, the frequency of its repair increases; it is possible to slow down physical wear and tear by introducing a maintenance system.
Moral (functional) depreciation is a decrease in the consumer attractiveness of certain properties of a property, which is due to non-compliance with modern standards in terms of functional utility. This type of wear is manifested in the outdated architecture of the building, layout, engineering support, etc. In domestic practice, it is called obsolescence.
Obsolescence is divided into functional and technological wear. Functional depreciation is a consequence of expanding the functionality of new (similar to existing) real estate objects. As a result of functional depreciation, real estate objects of older buildings become less attractive for future owners in terms of architecture, design, layout, engineering support, etc. and, accordingly, are cheaper. Technological wear and tear is a consequence of scientific and technological progress in the field of creating new structures, technologies and materials, which leads to a reduction in the cost of creating real estate and operating costs. Just like physical obsolescence, it can be removable and irremovable.
For example, it is possible to eliminate malfunctions of water and gas meters, plumbing equipment, restore built-in wardrobes, flooring, etc. The criterion for the elimination of wear is the comparison of repair costs with the amount of additionally received value: if the latter exceeds the cost of restoration, then functional wear is removable. The amount of removable functional depreciation is defined as the difference between the potential value of the building at the time of its valuation with updated elements and its same value at the same valuation date without updated elements.
Economic depreciation (depreciation due to external influences) is a decrease in the value of a building due to a negative change in its external environment under the influence of economic, political or other factors. The reasons for external wear and tear may be: the general decline of the area in which the object is located; actions of the government or local administration in the field of taxation, insurance; other changes in the market of employment, recreation, education, etc.
Significantly affects the amount of external wear and tear close proximity to "unattractive" natural or artificial objects: sewage treatment plants, restaurants, dance floors, gas stations, railway stations, hospitals, schools, industrial enterprises, etc.
The decrease in the value of an object associated with environmental pollution is determined using the methods used in determining depreciation. For example, the cost of removing toxic waste may be related to the cost of repairing the facility, i.e. the cost of repairable defects.
Economic depreciation, unlike physical and moral depreciation, is always considered irreversible.
In the legislation of most countries, the enterprise is not considered an independent subject of law; it does not recognize the nature of an economic entity that has separate property, its own balance sheet and enjoys the rights of a legal entity. An enterprise is considered as a certain property complex, which includes material and intangible elements and is an object of law. In the Civil Code of the Russian Federation, the term company used in relation to subjects and objects of law. enterprise a legal entity is called, i.e. a subject of civil law, a participant in entrepreneurial activity. At the same time, the term "enterprise" applies only to state and municipal unitary enterprises, which, as a commercial organization, are subject to state registration and act as a subject of law in various contracts and other legal relations.
At the same time, the same term is used to refer to a certain type of objects of law. In this sense company - this is an industrial and economic complex, the property of which is completely separated from the property of the organization - this is the basic component of the organization's infrastructure. Real estate objects are a spatial resource of its business activity, the life of the staff and the organization.
