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.

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.

Definition

A milieu in which the factors and forces that

are external to the management functions of a
firm impinge upon the companys ability to
develop and maintain successful business.

Socio-cultural environment, technological

environment, economic/competitive
environment and, political and legal
environment affecting business (STEP)

Real Estate Market Environment

Immediate Outer Environment

Market research & marketing consulting firms

Financial intermediaries
Customers
Competitors
General public

Immediate Outer Environment

Market research & marketing consulting firms

* Market study
* Feasibility study
* Marketing
Financial intermediaries
* Loan margin
* Borrowing cost
* Lending policies

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?

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 4Ps?
Identify gaps in opportunities, secure a certain
market position, fill the gaps, and, subsequently,
capture the market share.

Immediate Outer Environment

General public
* Who are they?
* What are their roles and functions?
* How do these roles and functions affect
companys business or project?

Outer Environment

Demographic
Market/Economic
Cultural
Political

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

Outer Environment

Peoples affordability
* income
* property price
* credit facilities
* interest rate
* amount of saving
Lack of affordability discourages DD

Property Price, Consumer Income, and Buyers

Affordability

Outer Environment

Culture: psycho-sociological and/or sociopsychological

Psycho-sociology
* Consumer behaviour (e.g. preferences)
* Norms and values
* Belief
Socio-psychology
* Lifestyle
* Perception

Outer Environment
Political
* Government policies
* Government regulations
Have ripple effects
Tend to raise developers costs

Importance to Market Research

Researching STEP fundamentals

Market forecast
Continuous flow of information

Summary

Market environment: a milieu in which factors and forces

that are external to the management functions of a firm
impinge upon the companys 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

Thank you!