1(a). List FIVE (5) forces of property development.
i. Population growth increase
The demand for property increases as more consumers appear in the market. When marriage and birth rates of a city increase, the demand for residential properties in that city increases. Marriage means the formation of a new family, it leads to the leaving of parental home and jointly own a new home. While increasing in birth rate (increasing in family numbers) has increased the demand for a bigger house. In retail, it’s all about the location, developer will decide according to the population of that area. The reason is that, more population means of more demand for goods and services, therefore more business opportunities are available.
ii. Improvement in economy
A positive, strong and steady economic growth denotes a raising of employment rate, people are able to attain a higher and stable income in this status. Accordingly, home buyers are doing away from the wait-and-see approach (World Finance 2016). Likewise, as extra income attained, people tend to invest on property in order to gain returns in the future. For development of industrial and commercial property, as the high rate of job opportunities and extra income, more office space, factory and retail center are on demand. Therefore, improvement in economy will drives the property development.
iii. Influx of investment
Invest in property is much easier than invest in stock market since it doesn’t need special knowledge to get involved. Accordingly, people tend to do investment in property market when extra money earned. It is a way for them to achieve financial discipline, even to gain returns in future (Philippine Daily Inquirer 2017). The value of property market increases as more people get involved, subsequently it attracts more people to invest. It is note that, not only local but also foreigner will take part in this investment. Therefore, developers will take this opportunity to further expand their development career in order to respond on this status.
iv. Changing of life-style
Recent generation are pursuing for a better quality of life. As they are well-educated, they have more requirements on their life-style in the sectors of safety, cleanliness, healthy, comfortability and sustainability of environment. In order to fulfill these requirements, the concepts and technologies in construction have become more advance and modern. However, people are non-stop in pursuing a much better life-style, as long as they are capable to afford the price, this forces developers keep on invent and improve the design, technology and facilities of the buildings.
v. Rural-urban migration
Living in an urban area is always what people longing for in order to enrich their own lifestyle. Nowadays people tend to had well educated. The reason is that, better education means better job career. The employment rate in urban area is always higher. For this, there is no doubt that living nearby a higher job opportunity is a better choice compared to the rural area. Besides, infrastructure in urban area is more advance and convenience. All of these improved the rural-urban migration, hence population of urban area increases, demand of property increases and boosting the property development.
All these forces are advised to be considered by Mr Alex Pang as he intends to develop both residential and commercial property on his land.?
1(b). Discuss who should be included into the team if the out-of-town retail development carries greater risks than a residential development.
Before making decision for the out-of-town retail development, market research is essential to be done as it helps to foresee the feasibility of the project. A professional marketer will assesses according to current demand and supply on retailing center, location, population, segmentation of consumers, consumers’ preferences, market trend and economic conditions.
An experienced valuer is able to determine the value of land through the location, crime rates, economic climate and any relevant property laws in that area. In case of a commercial property, a valuer needs to assess the business potential of specific vicinities. Based on his findings, valuer advises the developer on the value to be paid for developing the out-of-town retail project, providing effective strategies to help the development go through swiftly and also likely on the returns for the development (Sweeney 2014).
Positive growth of a town may cause the occurrence of rural-urban migration hence demand for goods and services in out-of-town area decreases. In such circumstance, out-of-town retail development is discouraged to be proceed. Therefore, if the future growth of a town can be predicted, the risks of out-of-town retail development can be reduced. Urban economist plays an important role in this, he is specialized in analysing the pattern of future growth of a town.
There is no doubt that a professional real estate agent has adequate knowledge in sales and marketing, economics, law and etc. Experienced real estate agent who is familiar with the neighbourhoods of the land to be developed will often know the market trend of that area. Therefore, he is capable to provide information and advices to the developer in the development of an out-of-town retail center (Boone 2017). Due to the nature of work, the network of a real estate agent is wide, he may be able to provide the access to potential retailers. He is also capable to advice on the tenants’ mix in the retail center.
As the development of retail center will locates at out-of-town area, developer may hires a commercial complex property manager to manage it in the future. This profession should be included in the developer’s team since he knows about the challenges that might be faced by a commercial property in future such as security and maintenance issues. The reason is that, it may be hard to find qualified contractors for maintenance. Besides, it is lack of security for a property locates in rural area (Ludwig 2015).
Mr Alex Pang prefers to develop an out-of-town retail center in Klang, Selangor. The above consultants are suggested to be include in his developer’s team in order to help him in evaluation of the riskiness of his development.
1(a). List FIVE (5) forces of property development.