Essay On Advanced Property Analysis

Managing properties as well as its market values is a complicated process, because of the various aspects involved such as finances, property valuations, legal claims and many more. Therefore, submarkets have become a common term among the real estate business planners. One of the significant submarkets of the real estate industry is the specialised properties. The real estate business has become of the crucial industry in Australia, because of its increasing economic contribution. As per the current reports, the average value of the Australia property market increased up to 221.2 billion US dollars, which is much higher than several other industries in the market. Therefore, it is beneficial to understand the concepts and various aspects of the real estate businesses as well as it market efficiency. In this assignment concepts of specialised property submarkets as well as its efficiency and structure will be evaluated using relevant data and information.

 

Market efficiency is an idea which can be considered as a degree to which the present rates or values accurately represents all pertinent and available information regarding the true worth of the specialised or any types of properties in the market. An efficient market has the capacity to prevent the chances of market beating due the available information among the traders is already included into the market value. Therefore, it can be said that the customers in the market prefers properties in the efficient market, because the available information are beneficial in terms of reflecting the company image. In addition, according to the experts, there are three various forms of market efficiency, such as strong, semi-strong and weak. The investors usually avoid the weak market efficiency because only today’s stock prices are able to reflect the information about the past prices. The trading investors cannot perform any technical analysis in this type of market. On the other hand, semi-strong form suggests that the available information in the market is utilised to calculate the current price of the stocks. In terms of the strong efficient market approach, both of the publicly available information as well as unknown information are used for calculating the current stock prices of the property. Therefore, it can be said that the measure of the market efficiency are the stock prices of the properties.

 

The Locke’s theory of property can be applied to understand the efficiency of the property market. This theory emphasises about the natural rights of the people, in terms of claiming individual property rights. It has been argued in the theory that the government has obligations with the natural rights of the people in terms of claiming property as they have limited power of acquiring properties in the market. Currently, an acquisition of specialised or normal properties needs requires several legal procedures. The investors have to calculate the future market value in order to predict the resale worth of the prices, which is a very hectic procedure. Therefore, efficient markets are considered to be beneficial for the investors because the market information reflects a lot about the real estate company. In terms of allocations of resources and operations, the market mechanisms suggests that utilisation of prices can be a signal to allocate resources to its highest valued uses. According to the market psychology, the customers will be willing to pay higher process for the properties that have more value.

 

Market segmentation is a common concept, which means that segregating the market onto several subsets, based on the unmet needs of the customers. The commercial real estate business people utilise the market segmentation in order understand the attract the attention of the customers. It is also beneficial for certain real estate developers to break the market monopoly by developing certain properties, which a segment of customers needed and has zero competitors in that segment. Some of the basic submarkets of the real estate development industry are commercial, hospitality, retail and housing. In Australia, the main property sectors are residential real estate, which means properties for the residents, commercial real estate, which is properties for general businesses and the industrial real estate means properties for the factories. According to the latest reports, currently the residential real estate sector value within Australia has surged up to a value of 9.9 trillion Australian dollars. With the help of the property segmentation and sub market analysis, it becomes easier for the real estate developers to invest in the properties that can provide highest profit return.

 

 

However, due to current economic disruptions, the housing market of Australia has been facing several difficulties, because the market value witnessed a sudden decline of 20% in this year. Therefore, it is beneficial for the companies to analyse the property segmentation and predict the future property market condition, and then invest in the industry. The examples of the submarkets can be defined as the properties available in the suburbs of Sydney or any larger city. Shrinking down the market area and analysing the customers from these particular sub markets will provide the company a clarified and detailed idea about the customer demands. On the other hand, there are different types of properties available in the market, which the company cannot categorised under any segmentations, which are specialised properties or real estate services. The particular reason behind this circumstance of not putting the specialised services under any categories are not many data or information is because of its functions or purpose in the society. In addition, there are not many data or information available in the market regarding this type of properties. Some of the major examples of the specialised properties are stream, or cemetery. In addition, these specialised services can be differentiated based on three different forms, which are collective property, private property and public property.

 

The valuation is concept or procedure, which helps the real estate developers to estimate the best possible transaction amount for the properties. In terms of the specialised, determining a market valuation becomes different, because of the lack of the sufficient details regarding the previous assets sold value. Therefore, the real estate developers find it difficult to compare the valuation prices, which ultimately create obligations in terms of valuation. The specialised property market is considered to be more diverse in nature than the non-special property markets. In addition, despite of the complicated nature of the traditional valuation method, the real estate developers prefer this method for valuation of the properties. One thing that the companies need to consider is that during the time of valuation is that the outcomes of valuation depend on three important factors. The three important factors are information of investors, sellers and buyers. In this type of method, a real estate developer does not have to derive an accurate outcome by analysing the data mathematically.

 

On the other hand, there is valuation analysis, which is also known as the mathematical model of property valuation. In this method the real estate developers have to analyse the numerical data such as the plot size of the location, volume, year of construction, number of floors and many more. In addition, the valuation analysis also requires qualitative evaluation of the information, which are mainly information about legal restrictions, site location, local infrastructure and most importantly the physical status of the property. The valuation of the specialised property automatically decreased when the physical status or the location condition of the property does not match with the customer demands. It can also be said that the new properties will have more valuation than the old properties because of its physical status. Another important characteristic of the specialised market is that the market price valuation of this type of properties depend on both of the quantity and quality information. The market price requirement for the specified special type of property has a relevance of one point, or 100%, which is equivalent to the relevance of all other criteria combined. Be it for any normal property or a specialised property, it can be said that the valuation of the properties is heavily depended on the estimated prices and the compared prices of the assets that were sold previously in the market.

 

It can be concluded from the overall discussion that the transaction of the properties is a complicated process, which needs appropriate analysis and evaluation. There are several aspects of the properties that are needed to be considered by the investors or the real estate developers, because the valuation of the properties in the market changes. In addition, it has been identified from this study that the market efficiency plays a critical role in terms of providing a clarified idea about the property. On the other hand, the specialised properties have a totally different place in the market, which are difficult for valuation. The lack of information about the selling prices of the previous specialised properties, makes it difficult for the investors or the real estate developers to determine an estimated price valuation.

 

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