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.
Expected results:
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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.
Definition
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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.
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Socio-cultural environment, technological
environment, economic/competitive
environment and, political and legal
environment affecting business (STEP)
Real Estate Market Environment
Immediate Outer Environment
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Market research & marketing consulting firms
Financial intermediaries
Customers
Competitors
General public
Immediate Outer Environment
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Market research & marketing consulting firms
* Market study
* Feasibility study
* Marketing
Financial intermediaries
* Loan margin
* Borrowing cost
* Lending policies
Immediate Outer Environment
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Customers
* Which target (individual, group, institution)?
* Type (e.g. first-time, non first-time)?
* Needs, wants, choices, preferences?
* Affordability?
* Behavioural aspects?
* Cultural aspects?
Immediate Outer Environment
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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.
Immediate Outer Environment
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General public
* Who are they?
* What are their roles and functions?
* How do these roles and functions affect
company’s business or project?
Outer Environment
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Demographic
Market/Economic
Cultural
Political
Outer Environment
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Population
* size
* quality
* distribution
* growth prediction
Supply and demand
Outer Environment
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People’s affordability
* income
* property price
* credit facilities
* interest rate
* amount of saving
Lack of affordability → discourages DD
Property Price, Consumer Income, and Buyers’ Affordability
Outer Environment
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Culture: psycho-sociological and/or sociopsychological
Psycho-sociology…
* Consumer behaviour (e.g. preferences)
* Norms and values
* Belief
Socio-psychology…
* Lifestyle
* Perception
Outer Environment
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Political
* Government policies
* Government regulations
Have “ripple” effects
Tend to raise developer’s costs
Importance to Market Research
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Researching STEP fundamentals
Market forecast
Continuous flow of information
Summary
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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
Thank you!