EXTERNAL ENVIRONMENTS OF REAL ESTATE MARKET

1. EXTERNAL ENVIRONMENTS OF REAL ESTATE MARKET Objective: To discuss: Outer market elements that impinge upon a particular property development. Their importance to real estate market research.

2. Expected results: • Understand the external environments of real estate market; • Can explain the main elements of these environments; • Can appreciate the influence of these elements on real estate market research.

3. Definition • A milieu in which the factors and forces that are external to the management functions of a firm impinge upon the company’s ability to develop and maintain successful business. • Socio-cultural environment, technological environment, economic/competitive environment and, political and legal environment affecting business (STEP)

4. Real Estate Market Environment

5. Immediate Outer Environment • Market research & marketing consulting firms • Financial intermediaries • Customers • Competitors • General public

6. Immediate Outer Environment • Market research & marketing consulting firms * Market study * Feasibility study * Marketing • Financial intermediaries * Loan margin * Borrowing cost * Lending policies

7. Immediate Outer Environment • Customers * Which target (individual, group, institution)? * Type (e.g. first-time, non first-time)? * Needs, wants, choices, preferences? * Affordability? * Behavioural aspects? * Cultural aspects?

8. Immediate Outer Environment • Competitors * Who are they? * What are producing? * How, how much, and where? * What are they offering? * What are their marketing strategies, especially with respect to the 4P’s? • Identify gaps in opportunities, secure a certain market position, fill the gaps, and, subsequently, capture the market share.

9. Immediate Outer Environment • General public * Who are they? * What are their roles and functions? * How do these roles and functions affect company’s business or project?

10. Outer Environment • Demographic • Market/Economic • Cultural • Political

11. Outer Environment • Population * size * quality * distribution * growth prediction • Supply and demand

12. Outer Environment • People’s affordability * income * property price * credit facilities * interest rate * amount of saving • Lack of affordability → discourages DD

13. Property Price, Consumer Income, and Buyers’ Affordability

14. Outer Environment • Culture: psycho-sociological and/or socio- psychological • Psycho-sociology… * Consumer behaviour (e.g. preferences) * Norms and values * Belief • Socio-psychology… * Lifestyle * Perception

15. Outer Environment • Political * Government policies * Government regulations • Have “ripple” effects • Tend to raise developer’s costs

16. Importance to Market Research • Researching STEP fundamentals • Market forecast • Continuous flow of information

17. Summary • Market environment: a milieu in which factors and forces that are external to the management functions of a firm impinge upon the company’s ability to develop and maintain successful business. • Immediate market environment: various groups of customers and the general public. • Outer environment: demographic, economic environment; cultural environment; and the political environment (STEP) • Significant implications to market research: • Researching the STEP fundamentals • Market forecasting • Continuous information

18. Thank you!