We have all heard the phrase “location, location, location” but what does this mean in practical terms when it comes to property prices? Economists enclose “location” in something called “hedonic pricing” for most homes, this translates to some useful key factors that impact your life and your daily lifestyle

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!