The act of manipulating, building on, and/or designing and constructing new uses for real estate is known as developing. Those that engage in real estate development are called "developers." Developers purchase land and either create or renovate the property, risking their resources and capital in the hopes of investment reward.
Sometimes real estate development is undertaken as a public works project, in which case it is not viewed as an investment in the classic sense. The government engages in public works development in order to benefit certain communities, put idle laborers back to work, or sometimes to just maintain a certain budget size.
For private developers, real estate development is a long-term, entrepreneurial undertaking. The developer must believe that the newly designed and designated real estate will have sufficient value (and meet sufficient demand) to compensate for the time, labor and other resources devoted to the project.
In urban areas, development is often restricted by community zoning laws. This is because most city and county government planners engage in Planned Urban Development (PUD), which segregates the uses of real estate (commercial, residential, recreational, etc.) into different "zones." In order to change the use of a property, developers must usually receive permission from city planners.
In the most general sense, real estate development is simply the mixing of one's labor with the land in order to achieve a predetermined end. In complex modern society, however, real estate development requires knowledge of financing, legal restraints, business and market forecasting, and project supervision.