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Management in the Built Environment Lesson 5 – Role of the Property and Construction Industry

Management in the Built Environment Lesson 5 – Role of the Property and Construction Industry. Aim of this lecture. Understand the role of the property sector and how it impact the construction industry Real estate integration into the economy Determinants of housing prices.

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Management in the Built Environment Lesson 5 – Role of the Property and Construction Industry

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  1. Management in the Built EnvironmentLesson 5 – Role of the Property and Construction Industry

  2. Aim of this lecture • Understand the role of the property sector and how it impact the construction industry • Real estate integration into the economy • Determinants of housing prices

  3. Role of Property Sector in the Economy

  4. The market for real estate

  5. Real Estate role in the economic growth Definition of real estate: • Include economic activity related to construction goods and • assets, with a MARKET • Transaction of space services and/or property assets • Finance and investments… financial assets • Other related services • Main markets : residential (house market) and non residential • (offices, retail, industrial,.. ) • Linked to the financial mechanism • Needs of other high quality/human-capital-intensive services • Knowledge the Market is the main resource allocation mechanism in real estate. • Prices are the signal

  6. The market for housing • If you had $500k to invest today, would you choose to buy bricks and mortar or another vehicle for the maximum ROI (return on investment)? • Why? • Is home ownership an investment or a liability?

  7. Owner Occupied rate in SG

  8. How we measure house prices • Property price transactions index – URA (Urban Redevelopment Authority) • Both sales and lease • Further broken down into industrial/Retail/Residential/HDB • Property affordability Index

  9. Determinants of property prices

  10. Spore Property Price index past decade

  11. Construction Industry Construction The Sector of the economy which constructs, alters, repairs and demolishes building, civil engineering works and other structures Industry

  12. Facets of Construction Industry

  13. Construction Industry in the economy • Motor moving the economy – strong contributor in SIN GDP • Construction materials industry: • new materials .. Research improving quality • new construction systems (research and innovative sector) • Increase the productivity of other sectors • Infrastructure investment is a key of economic development long • Increase accumulated knowledge: • research in engineering, • Construction systems • Planning… Redesigning cities • Update/Increase the quality of structures. • Products .. Housing stock, office buildings (business centre) • and services associated to construction • Produce CAPITAL GOODS (durable goods)… • Working over 50 years at least

  14. Important Inter-relationship

  15. Key takeaways in Lesson 5 • What are the keys words that you have learnt in this lesson • Discuss what do you see in these 3 circles • Are you able to apply some econ terms on these circles’ relationship ?

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