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INTRODUCTION TO REALESTATE ECONOMIC

By:

Ma sni binti Salleh

No. Bilik: B208-02Tel: 07-453 8152 / 019-7205105

ma snis@uthm.e du.my

BPE 3393BPE 3393

ECONOMIC FORECONOMIC FOR REAL ESTATEREAL ESTATESEM 1, 2009/2010SEM 1, 2009/2010

LECTURE 1:LECTURE 1:

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CONTENT

(a) What is real estate?

(b) What is real estate economics?

(c) Why study real estate economics?

(d) What is urban economics?

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1.0 WHAT IS REAL ESTATE

Real estate is defined as a land

The ownership of real estatecarries certain rights, known

as the bundle of rights -

includes the right to use,

possess, exclude and dispose

The rights are not absolute -they can be legally modified

by private restrictions and

government regulations and

laws

In short, real estate or realproperty is land and

improvements and the rights

associated with the ownership

of same

What is Real

Estate ?

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2.0 WHAT IS REAL ESTATE ECONOMICS

Real estate economics is about people and how their actionsaffect real estate values.

A formal definition - real estate economics is a study that useseconomic principles, both macro and micro, to analyze theimpact that national, regional, community and neighborhood

trends have on real estate values.

Focuses on the economic principles that affect real estatevalues.

Real estate economics is neither the study of generaleconomics nor a course in the practice of real estate.

Rather, real estate economics is the link between generaleconomic theory and applied real estate practice. 4

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A course in general economics concentrates on how society

attempts to use limited resources to satisfy the wants of its

people. However, such course does not examine how this,

affects local real estate market.

A course in real estate practice concentrates on the specifictechniques needed to complete a real estate transaction butspends little time discussing the economic influences that

determine whether a home purchase or other real estateinvestment will be profitable over the years.

Real estate economics draws principles from both generaleconomics and real estate practice and then combines themin order to study changes in real estate activity.

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The main thrust of real estate economics is to help real estatestudents anticipate future trends and what impact thesetrends will have on local real estate values.

Refer to Figure 1 and Figure 2.

Figure 1: The field of real estate economics draws principlesfrom both general economics and real estate practice.

General Economics

Principles

and Theory

Real Estate

Principles

and Practice

REAL ESTATE

ECONOMICS

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Figure 2: House of real estate economic

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3.0 WHY STUDY REAL ESTATE

ECONOMICS

Real estate economics help people to understand what causesfluctuation in real estate activity and how these changes canaffect local real estate markets.

Investors and licensed agents make real estate decisions thatinfluence the shape, form and value of property in a givencommunity.

Real estate decisions made today will be reflected in realestate values in the cities and neighborhoods of tomorrow.

A course in real estate economics aids people inunderstanding what impact todays real estate actions willhave on future real estate values.

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1) Market forces in the development of citiesThe interurban location decisions of firms and householdsgenerate cities of different size and economic structure.

2) Land use within cities

The intraurban location decisions of firms and householdsgenerate urban land-use patterns.

3) Urban transportationPossible solutions to the urban congestion problem andlook at the role of alternative urban transportationsproblem.

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4. Urban crime and public policy

Problem of urban crime are linked with two other urbanissues, poverty and low educational achievement.

5. Housing and public policyHousing choices are linked to location choices becausehousing is immobile.

6. Local government expenditures and taxes

In making location choices, households consider the mix oftaxes and local public goods.

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Class Activity

Real estate studies at universities are

biased towards urban problem.

Argue !

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THANK YOUTHANK YOUJuly, 2009

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