1. 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.

2. 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.

3. 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)

4. Real Estate Market Environment

5. Immediate Outer Environment
Market research & marketing consulting firms
Financial intermediaries
Customers
Competitors
General public

6. Immediate Outer Environment
Market research & marketing consulting firms
* Market study
* Feasibility study
* Marketing
Financial intermediaries
* Loan margin
* Borrowing cost
* Lending policies

7. Immediate Outer Environment
Customers
* Which target (individual, group, institution)?
* Type (e.g. first-time, non first-time)?
* Needs, wants, choices, preferences?
* Affordability?
* Behavioural aspects?
* Cultural aspects?

8. 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.

9. Immediate Outer Environment
General public
* Who are they?
* What are their roles and functions?
* How do these roles and functions affect
company’s business or project?

10. Outer Environment
Demographic
Market/Economic
Cultural
Political

11. Outer Environment Population * size * quality * distribution
* growth prediction
Supply and demand

12. Outer Environment People’s affordability * income * property price
* credit facilities
* interest rate
* amount of saving
Lack of affordability → discourages DD

13. Property Price, Consumer Income, and Buyers’ Affordability

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

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

16. Importance to Market Research
Researching STEP fundamentals
Market forecast
Continuous flow of information

17. 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

18. Thank you!