Construction & Property Economics Lesson 1 – Introduction

Introduction to Construction & Property Economics Aims To identify and evaluate the core issues of economics. To develop knowledge and skills on economic analysis relevant to the construction and property industry. To apply simple economic concepts and decision making techniques to construction /property scenarios

Time Table for ADCM/Bridging Construction & Property Economics Day Date Time Module LESSON FOCUS Saturday 2-Mar-19 2.30 PM - 5.30 PM MBE - Lesson 1 Intro Construction & PPty Econs Thursday 7-Mar-19 7.00 PM - 10.00 PM MBE - Lesson 2 Basic Concept of Supply & Demand Tuesday 12-Mar-19 MBE - Lesson 3 Micro and Macro econs wft build environment 16-Mar-19 MBE - Lesson 4 Demand and supply on construction industry Wednesday 20-Mar-19 MBE - Lesson 5 Roles of the ppty Sector and the construction industry 23-Mar-19 MBE - Lesson 6 Cycle of activity within the ppty sector and construction industry 26-Mar-19 MBE - Lesson 7 Inherent relations between economy, construction and the firm 30-Mar-19 MBE - Lesson 8 Issue of current interest rate, inflation and unemployment 2-Apr-19 MBE - Lesson 9 Revision and focus 6-Apr-19 1.00 PM - 4.00 PM MBE Exam 4 Questions all 25 marks over 3 hours   Lecturer Venue MBE - Management in the Built Environment (TG15MBE) Lan Luh Sing (Rebecca) Refer to Plasma TV

Introduction to Construction & Property Economics Lectures – Twice a week , 3 hours each Attendance at lectures is very important Attendance is monitored. Make notes and maintain a file Exam would be on Sat 6th April 2019 3 hours, 4 questions each 25 marks

Good Practice Attend Lectures – arrive on time Revise and enhance your notes Participate in all session formats Manage your time effectively Maintain a conducive learning environment Engage in discussion with your peers Communicate with the module tutor Mobile phone use during lectures?

What is Construction & Property Economics ? A study of people and how their action affect the construction industry and property values Study that uses economics principles Micro and Macro Analysis Analyzes trends Consider the supply (Construction) and demand (Property) Links general economics theory and real estate practice

Setting the Context What is economics about? EVERY DAY LIFE!!

What is economics? Economics originates from the Greek word for household management Householder UNLIMITED WANTS

What is economics? Basically, economics is about using/managing scarce resources (and making decisions about their use)

Defining Economics KEY CONCEPTS Economics is the study of rational choice under conditions of scarcity Opportunity Cost is the best alternative that you gave up when making a choice

Unlimited Wants Vs Limited Resouces

Defining Scarcity and Choice Rational Choice means people making Calculated, self-interested choice after Risk Cost Benefit

Important Economics Key Concepts Unlimited Wants Limited Resources SCARCITY Make Decision Opportunity Cost Rational Choice

Simplest view of an economy Consumer (householder) People buy goods and pay for them - Property Producer ( Construction firm) Construction firms pay people to build property

Environment Economic View

Construction Firms Revenue from sales properties and services (lease/maint) of properties they constructed. Revenue Property Sales Ppty Mgt Services Refurbishment Lease/Rent

But in real life, consumers have to pay taxes to the government, buy goods etc Households Abroad Buy property Taxes Government Construction Firms Sells property abroad and imports materials Abroad Taxes Government

Government – the 3rd element SG IRAS FY2016/2017 Tax by Type What are the taxes that are tied to construction and property sector ?

This leads to a more complicated circular flow consumer People buy goods and pay for them Construction Firm Construction firm pays people to work for them Government Banks

Economic Systems Economic Systems are concerned with the ownership and control of resources 2 main types of system: Market Economy: resources are allocated through the price mechanism and the ownership and control of such important resources (such as land and capital) which are in the hands of private firms and individuals. Command Economy: resources are allocated by a central planning authority and key industries and resources are owned and controlled by the state. What type of economy is Singapore? Which country is govern by Command Economy ?

Main Branches of Economics Microeconomics: is the study of individual decision-making by both individuals and firms Macroeconomics: is the study of economy-wide phenomena resulting from group decision-making in entire markets. It deals with the economy as a whole. Many overlaps between micro and macroeconomics exists eg. Unemployment, inflation

Micro Vs Macro Economics Micro Economics Deals with individual’s economy behavior Deals with the pricing of a commodity in a particular industry Price is the basic parameter in micro economics Study of micro economics is important for resource utilization, public finance, and making business decision Macro Economics Deals with aggregate behavior of people in general Deals with general price level in the economy, eg. National Income , Consumer Price Index Income is the basic parameter in macro economics Study of Macro Economics is important for the formulation of economic policy for whole nation

The SG Construction Industry Context Why is the construction sector an important part of the SG economy ? How can you relate it to property? Why is the value of property important to the SG economy?

Construction Industry Vs Property Market

The Nature of Construction Economics Construction Economics is a branch of the general economics It consist of the application of the techniques and expertise of economics to the study of construction firms, the construction process and the construction industry

Characteristics of Construction The fall into 4 main groups The physical nature of products The structure of the industry together with the organization of the construction process The determinants of the demand The method of price determination

Correlation between Construction and Property Market in Singapore

What DO YOU THINK the economic outlook of the Singapore is in 2019? Finally! What DO YOU THINK the economic outlook of the Singapore is in 2019?