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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:

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 

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)


Real Estate Market Environment


Immediate Outer Environment     

Market research & marketing consulting firms Financial intermediaries Customers Competitors General public


Immediate Outer Environment ď Ž

ď Ž

Market research & marketing consulting firms * Market study * Feasibility study * Marketing Financial intermediaries * Loan margin * Borrowing cost * Lending policies


Immediate Outer Environment ď Ž

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 

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 ď Ž

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    

Demographic Market/Economic Cultural Political


Outer Environment ď Ž

ď Ž

Population * size * quality * distribution * growth prediction Supply and demand


Outer Environment 

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  

Culture: psycho-sociological and/or sociopsychological Psycho-sociology… * Consumer behaviour (e.g. preferences) * Norms and values * Belief Socio-psychology… * Lifestyle * Perception


Outer Environment 

 

Political * Government policies * Government regulations Have “ripple” effects Tend to raise developer’s costs


Importance to Market Research   

Researching STEP fundamentals Market forecast Continuous flow of information


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


Thank you!

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