PROPERTY MARKET

ANALYSIS
(BPE 34103)
PREPARED BY:
Assoc. Prof. Sr. Dr. Azlina Md. Yassin
 Property Market
Analysis:
Urban and Sub urban
Areas
 The Nature of real property
market
Real property refers to a particular type of
good – land and resources embodied in
land. The point is that neither is physically
moveable. This charactersitics
distinguished it from labour, capital and
goods in general.
Land resources are not movable, but can
be OWNED by person or institution.
What are actually owned?? – PROPERTY
RIGHT / INTERESTS.
# Real property market is simply of
arrangement by which buyer and seller of
land are brought together to determine a
price at which the particular property right
Property rights
The function of property
market
To allocate existing real property
resources and interest .
Land resources are scarce, they
have to be allocated between the
various uses – competing each
other.
The market respects references and
allocate available supply
accordingly.
To indicate changes in demand for
land resources and interests.
Changes in supply take time, and it
To indicate changes in the conditions
upon which land resources can be
supplied.
Improve techniques in constructing
high rise building – example : make
flat cheaper compared with low rise
houses and flat.
To induce demand to respond to
changes in the conditions of supply.
To ‘rewards’ the owner of land
resources.
Factor affecting property
values
 Study Focus

Market Individual
Focus Local economic Decision Feasibility
condition –
analysis –
fundamental
evaluates
determinant of
specific project
demand
Investment
analysis –
Market analysis evaluate
– assess specific
demand property as
potential
Marketability investment
analysis –
assess
competitive
position of
specific
development
 The Study Process
What are the characteristics that subject
property offer to the market? Any examples?
Indentify potential users: to purchase or to
rent the subject property
Most probable buyer/tenant analysis.
Is there any need for real estate space?
Demand analysis
User differ for each property type
POPULATION – HOUSEHOLD – HOUSING
UNITS
INCOME – EFFECTIVE PURCHASING POWER
– RETAIL SPACE
JOBS - % USE OFFICE (TYPE OF BUSINESS) –
OFFICE SPACE
JOBS - % USE INDUSTRIAL – INDUSTRIAL
Competition?
Analysis of supply of particular property type.

Comparing market demand and supply

Equilibrium analysis
The pricing – what is appropriate price? How much rent to
charge?
Competitiveness of location – how is it possible to attract
buyer/tenant or customer (retail space)
Property characteristic competitive?
How much of the demand can be captured?- this can only
be estimated based on market information or survey.

Marketability of subject property

Capture analysis

Does the property make financial sense

Is it a good investment? What is its market value? Is the
property’s value more than its cost?
Feasibility analysis and/or highest and best use.
 Steps Need To Be Taken
Define the Define the
property
productivity
users market
analysis representation

Forecast
demand
factors

Inventory and Analyse demand

forecast
and supply
competitive
interaction
supply

Forecast
Property Productivity Analysis
A – Physical attributes/characteristics
B – Legal and regulatory attributes
Zoning requirement – Check with
Planning Department - GAZETTMENT
Planning requirement, limitation on
property interest.
C – Location attributes
Identification of economic attributes –
association between land uses and its
linkages
Identification of competition &
comparison of location advantages
Identification of movement of
demand – direction of urban
growth
Analysis of urban growth
structure – pattern, direction
and rate.
Analysis of factors influencing
urban growth structure –
natural, manufactured and
political
D – Market appeal attributes
Identification of specific
attributes such as design or
Users Market Representation
A – Market area concept
Time-distance concepts
Area over which equally desirable –
substitute properties as a competitor to
subject property.
B – Geographic market representation
C – Identification of characteristic of most
probable user
Profile of consumer
Household – residential property
Business – office space
Consumer income characteristic – retail
space
Forecast Demand Factors

A – Major demand types

Population creates household
Income create retail buying power
Employment create office and industrial
users
B – Tastes and preferences: behavioural,
motivational, and psychological
factors.
C – Demand segmentation
 Inventory & Competitive
Supply
A – analysing existing competitive stocks
Proposed construction
Probable additional construction

B – Projecting potential competition

C – Factors influencing completion of

potential competition
Availability of land
Rate of interest – cost of borrowing
Material and labour costs
Entrepreneurship/investors
 Demand & Supply
Interaction
Residual demand study
A – Competitive environment
B – Residual demand concept
Forecast Subject Capture

A – Capture rate and absorption rate for

subject property

B – Risk analysis

C – Conclusion
 Market Analysis Level
Level A and B Level C and D

Emphasis on knowledge and historical data

Inferre Emphasis on quantifiable data and forecasting
Funda
d mental
Deman Deman
d d
Studies Studies
Understanding Property
Market Environment
Push and pull
Property Market
Environment
Divided into TWO:
Immediate Macro
Environment
Outer Macro Environment
 Immediate Macro
Environment
Parties/factors directly involve with
property industry:
Suppliers of building materials
Timing of launch, development
etc
Financial intermediaries (eg.
Responsible financing)
 Immediate Macro
Environment
Parties/factors directly involve with
property industry:
Suppliers of building materials
Timing of launch, development
etc
Financial intermediaries (eg.
Responsible financing)
 Immediate
Macro
Environment
Important group of customers: (Cont.)
Consumer market: first time buyers, individual
buyers, companies and corporations
Commercial and industry market: individual or
companies buying real estate for production
process
Government markets: government bodies (eg.
Universities, ministries, institutes)
buying/lease for mass accommodation
Investor/speculators: buying for letting and
resale purposes.
 Immediate macro
environment (cont.)
Property market surrounded by 7 types of
public/parties:

Financial public: banks and finance institutions

eg. Maybank, Public Bank, MBSB etc
Media public: they carry out news, features,
magazines, radio, television for media coverage.
Government public: need to incorporate with
government planning/development/requirements
eg. Safety, quality, regulations
Citizen action public: consumer
organisation, environmental
group, NGOs – public relation,
media coverage etc.
Local public: neighbourhood
residents etc.
General public: public attitudes
to product and activities. effect
on public image.
Internal public: blues collar
workers, white collar workers,
employees.
 Outer Macro
Environment
Brassington and Petit (1997) define as
STEP

Social-cultural (S)
Technological environment (T)
Economic/competitive
environment (E)
Political and legal environment
(P)
 Social-cultural (S)

Demographic

Socio-psychological profile (eg.

Consumer pattern)

Business ethics

Environmental issues
 Technological
environment (T)
Innovation and improvement in
methods and techniques of human life
New building materials
New product technology
New production process
Information technology (video-
Gmail Tap)
Economic Environment
(E)
This includes macro and micro levels:
Company resource
Structure of property market
Economic/marketing variables
such as interest rate, taxation,
and government spending.
Global economic environment
Political and legal
environment(P)
Government policies and legislation
influence the property sector.
Eg. Responsible financing
policy
 Summary

Several External factors influence

property market direct or indirectly.
End of Class…