This is not a bug. UFactory is an editor only class so you cannot put it in runtime code (code that doesnt depend on the editor). Development configuration is a non-editor configuration. It is left up to the user to put the factory subclass in editor only code.
Adding a new custom UFactory code class to a project results in no longer being able to build the project for the Development configuration. Prior to adding the UFactory code class the project can be built for the Development configuration, but after adding the UFactory code class a Development build of the project will always fail, even if the UFactory code class is removed from the project.
The build fails with numerous build errors in Engine code, such as:
The build completes successfully.
There's no existing public thread on this issue, so head over toAnswerHub just mention UE-57727 in the post.