LAND ECONOMIC ( BPE 23302 ) LECTURE 1 12 FEB 2017

INTRODUCTION TO REAL ESTATE ECONOMIC LECTURE 1 INTRODUCTION TO REAL ESTATE ECONOMIC

WHAT IS REAL ESTATE ?

● In general real estate is defined as a land. ● The ownership of real estate carries certain rights, known as the bundle of rights. ● The bundle includes the right to use, posses, exclude and dispose. These rights are not absolute; they can be legally modified by private restrictions and government regulations and laws. ● In short, real estate or real property is land and improvements and the rights associated with the ownership of same. Posses : memiliki Dispose : melupuskan

WHAT IS REAL ESTATE ECONOMICS ?

● Real estate economics is about people and how their actions affect real estate values. ● A formal definition would be; real estate economics is a study that uses economic priciples, both macro and micro, to analyze tha impact that national, regional, community and neighborhood trends have on real estate values. ● Real estate economics focuses on the economic principles that affect real estate values.

WHAT REAL ESTATE EONOMICS IS NOT ● Real estate economics is neither the study of general economics nor a course in the practice of real estate. ● Rather, real estate economics is the link between general economic theory and applied real estate practice. ● A course in general economics concentrates on how society attempts to use limited resources to satisfy the wants of its people. However, such course does not examine how this, affects local real estate market.

● A course in real estate practice concentrates on the specific techniques needed to complete a real estate transaction but spends little time discussing the economic influences that determine whether a home purchase or other real estate investment will be profitable over the years. ● Real estate economics draws principles from both general economics and real estate practice and then combines them in order to study changes in real estate activity.

● The main thrust of real estate economics is to help real estate students anticipate future trends and what impact these trends will have on local real estate values.

Illustrates the relationship of general economics, real estate economics, and real estate practice. Principles And Theory Principles And Theory * The field of real estate economics draws principles from both general economics and real estate practice. REAL ESTATE ECONOMICS

WHY STUDY REAL ESTATE ECONOMICS (1) To helps people to understand what causes fluctuation in real estate activity and how these changes can affect local real estate markets. (2) To understand what impact today’s real estate actions will have on future real estate values. ●

LAND ECONOMIC CONTENTS Divided into 2:- (I) Rural land economic (II) Urban land economic Rural land economic emphasis on vacant land and agricultural land. Urban land economic emphasis on space economic and real estate economic

LAND ECONOMIC CONTENTS cont. Emphasis is given on problem solving that related to land issues rather than to develop a new theory that related to land usage. Land matters / land economic issues: How to increase / maximze of land usage for the purpose of (1) production; (2) Division. Require an implementation / adoption of some fundamental economic theory (for example: cost theories, return, price, profit and value).

(1) Production Land factors were combined with other production factors for the purpose of goods and services production: How to achieve the highest and best use for land usage. (2) Division Land factor was allocated for the purpose of development / remain vacant for the purpose of speculation: How dividing the land usage to several alternative usage.

OBJECTIVES OF LAND ECONOMIC STUDY i. To provide information related to social phenomenon on land usage and land division. ii. To observe any problems related to cost, price, land value, return from land and land usage control. iii. To develop an indicator system, for the purpose of assessment for land usage and land divisiom, based on an economic fundamentals.

OBJECTIVES OF LAND ECONOMIC STUDY iv. To examine and evaluate land ownership system, land taxation system, land market system and land investment system. v. To evaluate the land usage strategic.

DETERMINATION ON LAND ECONOMIC STUDY ● Two (2) assumption for land economic study:- (1) Land factor is a production factor. (2) Land demand and land usage are in the continuously demanding situation (because land supply is limited).

CONCEPT OF LAND ECONOMIC STUDIES ● The basic fundamental of land economic is related to ownership, land usage, and characteristics of land. ● Land ownership means “provides a power to the land owner for the maximum utilisation of the land in order to produce a maximum returns by time, and also to improve the economic value of the land.

The concept of “land ownership” is inclusion in the land/property The concept of “land ownership” is inclusion in the land/property. Therefore, the land ownership is important for the future development of the land. Land ownership: Free hold, Lease hold, Rent, Mortgage. Land ownerships have an impact on value of land. Therefore determination of land ownership is important for land value / market.

CHARACTERISTICS OF LAND Land possesses the following characteristics:- 1) Free gift of nature- land is a gift of nature given to man free of cost 2) Land is limited in supply- other factors of production can be increased in supply to a greater or lesser extent. but it is impossible to increase the supply of land 3) Land is a primary factor of production- in every kind of production, we have to make use of land

4) land is a passive factor of production - because it cannot produce anything by itself. 5) land is permanent - land is indestructible 6) land is immovable 7) land varies in fertility 8) land differs in location 9) land has many uses scarcity

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