PROPERTY MARKET PROJECT

4531BEKL- LECTURE 1

PREPARED BY: MURNI MOHAMAD

WHAT IS PROPERTY MARKET???

Property
 Property often refers to the ‘land’ or ‘land and building’. It is also known
as real estate;

 Property refers to immovable property which includes land and

improvements to the land such as buildings. Specifically, real estate can
be defines as the physical land and those man-made items attached to
the land be it on, above or below the ground.
Property market..
Market
 Property market is simply the arrangement by which buyer and seller
of vacant land, agricultural estates, industrial building, offices, shops
and houses are brought together to determine a price at which
particular property rights owned can be exchanged;
 The environment in which goods and services trade between buyers
and sellers through a price mechanism. The concept of a market
implies that goods and/or services may be traded among buyers and
sellers without undue restriction on their activities.
The main participants in real estate market…
 Owner/user: These people are both owners and tenants. They purchase
houses or commercial property as an investment/ rent out or lease/ live
in/ utilize as a business.

 Developers: These people prepare raw land for building, which results in
new products for the market.

 Facilitators: This group includes banks, real estate agent, lawyers,

valuer and other that facilitate the purchase and sale of real estate
Category of Land Use

Under section 52 (1) National Land Code 1965, there shall

be three categories of land use known as:

i. Agriculture

ii. Building

iii. Industry

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Section 115: Agriculture

 The dwelling-house for the proprietor of the land or any other person
lawfully in occupation thereof shall not occupy more than one-fifth of
the whole area of the land or two hectares which ever is lesser;
 The purpose of agriculture;
 The purpose of extracting or processing raw material from any
agriculture produce of such land;
 The purpose of preparing for distribution any such material or
produce, or any honey-bees, livestock or reptiles kept or bed on such
land , or produce of such livestock or aquaculture on such land;
 The purpose of providing educational, medical, sanitary or other
welfare facilities, including facilities for the purchase of goods and
other commodities
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Section 116: Building
 Residential purpose;

 Administrative or commercial purpose, or the purpose of

passenger transport;

 The purpose of exhibiting, selling by retail, repairing or otherwise

dealing in any goods or commodities, or providing any services;

 The purpose of providing educational, medical, sanitary or other

welfare facilities;

 The purpose of entertainment, refreshment or recreation;

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Section 117: Industry

 For the purpose of factories, workshop, warehouse, docks, jetties, railway or

other buildings or installations for use for or in connection with one or more of the
following purposes:

a. Manufacturer;

b. Smelting

c. The production or distribution of power;

d. The assembling, processing, storage, transport or distribution of goods, or

other commodities

 For the provision of educational, medical, sanitary or other welfare facilities for
industrial purposes.
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Supply and Demand of Property

Introduction

 Property prices and rentals are determined by supply and demand of

property. Supply and demand are one of the keys to understand the
dynamics of the property market.
Factors affecting supply of property

 Planning control (Local Authority/ State)

 Changes in building costs/ the cost of production (if the land price
too high-supply will drop)

 Availability of land

 Economic condition

 The number of developers in the industry

 The price of property

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Factors affecting demand of Property

 Selling price;

 Growth in population;

 Location;

 Borrowing/ interest rate;

 Taste and preference e.g. gated and guarded schemes

 Availability of finance

 Demographic factors e.g. age, gender, occupation, income

level, race, number of household etc.;
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How property market react to changes in demand

‘What happens with a real estate demand change?’

An increase in demand for a particular type of real estate, at a particular

location, will generally have the following consequences:
Cont’…
 An increase in demand will reduce the number of existing property
vacancies;

 This reduction in vacancies will be followed, relatively quickly, by an

increase in rents and prices as more people continue to bid for the
existing supply.

 As demand pushes rents and prices up, a point is reached where,

investors and developers, motivated by profit potential, are drawn into the
construction market.
Cont’…
 As the new construction grows, eventually it overtakes the increase in
demand, and vacancies begin to rise.

 This increase in vacancies causes a decline in rents and prices.

Tutorial
1. Discuss how demographic factors could affect demand for retail spaces.

2. Explain three factors affecting the demand for industrial properties

3. Explain factors affecting demand for property of categories below:

 Physical factors;

 Economic factors;

 Financial factors.
To be continued…

Thank You