3: P Development, Site Analysis, Market Research Flashcards
Mention 3 main categories of reasons for property development
A site in search for a use, a use in search for a site, investor wanting to invest in one of the above
Explain 6 major purposes of site analysis!
- Identifying occupancy/development-attracting attributes
- Insight to product affecting demand, prices, competition
- Basis for comparing properties/sites
- Relate attributes to valuation techniques
- Evaluate alternatives (development/use) to attract highest income/revenue
- Identify most probable site user
Explain the concept of attributes for site analysis!
Attribute is a characteristic that can attract potential site users, divided into static and dynamic. The value of each attribute causes site’s price variation (inhomogeneity)
Explain locational characteristics and its 4 main subdivisions, use examples! Also explain its relation to linkage in site analysis!
(All +)
- ACCESS POINTS: Easy and secure access points
- MOVEMENT CHANNELS: Sufficient in weight and volume
- NEIGHBORHOOD SETTINGS: Suitability of proposed tenants with the neighbours
- SPACE RELATIONSHIP: Linkage, convenience, and beneficial site changes
Linkage defines off-site/external characteristics of a site, with activity/user-specific benefits (packet of functions)
Explain legal characteristics and its 5 main subdivisions, use examples!
- RESTRICTION WITH TENURES
Tenurial system, duration, rights and obligations defined by law
e.g. when the laws reduce the opportunities of the proposed property (-) - RESTRICTION WITH USERS
Decision on land and improvements
e.g. success in pressing a change in zoning suitable with proposed property (+) - POLICIES UNDER WHICH RIGHTS ARE ADMINISTERED
Possible changes of policies due to the authorities
e.g. when the current authorities can be bribed; a disadvantage for developers with limited budget (-) - RESTRICTION ON PROFITS AND INCOME FLOWS
Policies regarding rent controls
e.g. the government set lower price for rents to help the low-income population in socialist governance (-) - POLITICAL FACTORS ASSOCIATED WITH OWNERSHIP AND THE USE OF LAND
The need to market property proposal to political bodies with answerable administrators
e.g. the elected new president has aligned goals with the property developer (+)
Explain psychological (3 subdivisions) and environmental characteristics (2 subdivisions), use examples!
Psychological
- LOCALITY: The image of the neighbourhood (e.g. opening a café in Lygon St., which has good reputation for cafes) (+)
- THE PROPERTY: Elements such as lighting and colour tone (e.g. bright colours of a restaurant invites customers in) (+)
THE MARKET: Perceived condition of the market (e.g. buyers not having an urge to purchase as supply is high) (-)
Environmental
- ON SITE: Consequence of the site’s natural characteristics such as flora, fauna (e.g. capitalise on fauna preservation) (+)
- OFF SITE: Affecting those who have no say about the property (e.g. shopping mall that buy the residential area of the poor for a price lower than the market, but sufficient for them) (-)
In choosing a project, explain:
- 6 steps of process
- who and what (3) it affects
- what to consider in identify a project and its desirable location (4, hint: idem what)
- why should one conduct market research, its role, and how to make it effective
CHOOSING A PROJECT
- Process:
(1) Motivations (3 reasons for property development)
(2) Marketing (sensitivity, curiosity)
(3) creativity, informally brainstorming
(4) Strategic planning (ends, means – Graaskamp determining course of action – RE investment, development), market research (planning and control)
(5) ideas (all along – brainstorming - nominal group process (group willingness to prioritize, analysis)
(6) control risk: stop (best possible device to control risk)/continue, some succeed - Affecting company (equity-borrowing, skills-HR, management)
- Considerations helping to identify specific project and its desirable location: equity/financial capacity, talent/skills, organization size, vertical/horizontal integration
- Market research:
Why? Seat of the pants; risky
Role: Tool for strategic decision making in competitive, highly regulated environments
Effective: Clearly define reasons and capacity
In using macroeconomic trends in generating ideas for property development, mention 2 general warnings and 2 warnings that creative insights and problem solving has to cut through!
- Rarely can be used to arrive at project IDEAS
- Macro projections and forecasts are unavoidably risky and uncertain
Creative insights and problem solving has to cut through:
- Very complex, thus virtually impossible to examine all interactions and implications of trends
- Too general and AGGREGATED, need to reduce trend to local level to be useful
Mention 5 broad determinants of the use of land for site analysis which give rise to productivity (according to Whipple), and differ static between dynamic attributes when possible!
Physical (static), psychological, locational (dynamic linkage), legal (dynamic), environmental
Explain physical characteristics and its 5 main subdivisions, use examples!
- GEOMETRY: Size and shape support the proposed functional mix its efficiency (+)
- GEOLOGY: Soil elements and topography that support the planned property (+)
- HYDROTROPIC: Water-related components of the site
High water table that causes pumping cost (-)
Low lying area; an opportunity for a unique property design (+) - NONBUILDING IMPROVEMENTS: Improvements to or in the site. e.g. swimming pool that can be used for the proposed use of the property (+)
- BUILDING IMPROVEMENTS : Size, condition, layout.e.g. layout of an office is not flexible for changes in future tenancy area (-)
Mention 6 reasons why test marketing do not work in real estate development! What does it imply?
- Physically fixed to a location, too expensive, large, long-lasting, need to be built, and invite a sample of patrons
Implication:
- Cannot simply test a new concept
- Once built, fully committed
- good market research is important
Classify linked establishment based on person and goods, AND based on Mitchell-Rapkin classifications:
Movement of persons (to receive / provide a service) / movement of goods (1-way of processing, distribution, consumption)
Mitchell-Rapkin
DOMINANT-SUBORDINATE
- Dominant use (large operation with higher drawing power relative to its linked establishments)
- Subordinate use (serves and will not exist without the dominant establishment)
DOMINANT-ANCILLARY
- Ancillary: Additional use, snack bar in an office (dominant)
CO-DOMINANT use has an equal drawing power with other dominant establishments
