UNIVERSITY OF DAR ES SALAAM

COLLEGE OF ENGINEERING AND TECHNOLOGY

DEPARTMENT OF STRUCTURAL AND CONSTRUCTION ENGINEERING

BACHELOR OF SCIENCE IN QUANTITY SURVEYING

QS 368: REAL ESTATE MARKET ANALYSIS

GROUP NO. 03

S/N NAME REGISTRATION NUMBER

1. BALELE, STANLEY T 2018-04-07671

2. HAIDALY, ZAHIDA H 2018-04-04269

3. GUTTA, ANASTAZIA P 2018-04-06728

4. ATUGONZA, PALVIN M 2018-04- 04263

QUESTION:

How can we conduct market research to forecast and create an economic base for real estate market
analysis in quantity surveying? Provide concrete data sources and examples.

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Market research: is the process of gathering information about target customers and markets in
order to improve or introduce a product, feature, or service.

- Market research determines the viability of a new service or product through research
conducted directly with potential customers which allows a company to discover the target
market and get opinions and other feedback from consumers about their interest in the
product or service.

Forecasting: in real estate refers to the practice of predicting what will happen in the future by
taking consideration of factors affecting real estate market currently and those which are likely to
occur in the future.

An economic base: in real estate market analysis determine how local economic area is integrated
within the larger parent area and whether or not the local economy is self-sufficient. An area’s
economic base comprises of economic activities, industries that generate income and provide
employment in that area.

- Economic base theory rest on the proposition that a city’s growth depends on the amount,
type and diversity of specialized industry segments that export goods and other regions or
cities.

Hence, we are going to see how to conduct a market research to forecast and create an economic
base for real estate market analysis in Quantity Surveying.

✓ But first let’s have a brief difference between market research and market analysis as
people have been using the two interchangeably.

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Difference between market research and real estate market analysis:

Market Analysis is a much broader exercise of analyzing the market, which could include your
own company, competitors, the business context and the customers.

However, Market Research is usually, extremely focused in its nature and directed usually at
testing a hypothesis or getting to know the customers.

We can say that market research is a subset of market analysis

A figure showing the relationship between market analysis and market research.

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How to conduct market research to create an economic base for real estate market analysis:

• Select segment for researching

-This involves selection of a preferred segment which has attributes satisfying the needs
and wants of customers. This could be done effectively by considering homogeneity,
heterogeneity, sustainability, operational, accessibility and actionability of the segment as
the criterion for selection.
-Example of segmentation variables include residential real estate, commercial real estate
and industrial real estate
• Assess neighborhood quality
-Assessment of the environment if it conveys a sense of well being and satisfaction to users
through physical, social and economic characteristics. This could be done effectively by
considering the neighborhood planning which provides important information for
development of that neighborhood.
- The assessment should be done including frontage facing, middle, rear, right, left of the
segment.
• Identify unique features of the segment

-Identify features that differentiate the property from others in the segment such as age of
property, size and square footage, location, facilities around.

-These features are potential and if well analyzed and developed they help in competition
with other properties in the segment

• Analyze features of the actors in the market

-A market actor means a person, business, or organization that affects the market
performance.
-This involves identifying all actors in the market (customers, distributors and facilitators)
including those involved directly (customers and distributors) and also those involved
indirectly(facilitators)

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• Carry out demand and supply analysis for each sub category
-Demand analysis is the research conducted by producers that aims at understanding
customer demand for certain product. This involves analysis on taste and preference of end
customers, prices of substitute and complementary products.
-Supply analysis is the research conducted to understand the extent that properties can be
distributed to customers.
-The forces of supply and demand analysis work against one another until the point at
which a property’s equilibrium price is reached.
-This aids in forecasting sales and providing guidance for manipulation of demand.
-Example of factors that affect demand and supply in real estate business include incomes,
rents, interest rates, credit availability, size of population.
• Analysis of the effects of supreme/Substantial interventions
-This is intentional interference of a government in the market process with the aim of
correcting market failures, providing legal and social framework, and promoting the
general welfare of people.
-Hence, the analysis of these interventions is significant in market research as they have an
impact to customers. Example legislation, subsidies, taxation, zoning, rent control,
minimum and maximum prices policies, licensing of market participants, restrictions.
• Reconciliation of the results
-Coming up with conclusions after working out previous processes (segment selection,
assessment of neighborhood quality, identification of segment’s unique features, analysis
of features of actors in the market, demand and supply analysis, analysis of effect of
supreme/substantial interventions). These results must be able to provide sufficient
details to enable forecasting and creating an economic base for real estate market
analysis.
• Preparation of reports
-All the procedures with all necessary information should be well documented to provide
a base for review, reference and record keeping.
-This report should include TORs, methodology and approach, discussion of findings and
recommendations and certifications with appendices.

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Importance of conducting market research for real estate market analysis:

The main goal of real estate market research is to understand if a real estate business will succeed
in a specific location, hence market research helps to achieve this by;
• Validation of market considerations
-This could be potential to avoid unnecessary risks and using available opportunities.
• Setting strategy and deals to property development
-Knowing demand and supply enable to plan strategies that are effective. Example
lowering rents due to affordability of users could be beneficial.
• Investment plans
-This involves decision on whether to invest or not based on findings from the research. If
there is profit then it is good to invest, or knowing necessary developments required before
investment, or how much to invest.
• Tax reviews
-Help in reviewing taxes by authorities such property tax, land rent, withholding tax, other
taxes, hence making decisions on value of tax for benefit of all community.
• Municipal plans implementation
-Municipal plans are well implemented to benefit people. This includes land acquisitions,
service and infrastructure provision.
• Public and private fund management
-Reducing unnecessary costs that could be encountered due to lack of market research is
among the effective way of public and private fund management.

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Examples of projects that have encountered loss due to lack or poor market research:
-From Control and Auditor General (CAG) report:
✓ TBA BUNJU PROJECT
✓ NSSF DEGE PROJECT KIGAMBONI
✓ 711 NHC KAWE
✓ NHC- MOROCCO SQUARE

Hence, we have these vivid examples and concrete data source (CAG) to show how market
research is important for real estate market analysis.

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REFERENCES:
Beaumont R, (1991), An introduction to Market Analysis, Norwich: Environmental Publications
National Audit Office of Tanzania (2021), CAG reports (Retrieved April 12, from
https://www.nao.go.tz/)
Nell C, (1998), Real estate market analysis; Prentice Hall, Englewood cliffs, NJ.
Villegas, F. (2020). Real estate market analysis: What it is and how to do it. (Retrieved April 11,
2022, from https://www.questionpro.com/blog/real-estate-market-analysis/amp/ )
Pollfish, (2021) How to conduct market research like a Pro (Retrieved April 11,2022, from
https://resources.pollfish.com/market-research/how-to-conduct-real-estate-market-research-like-
a-pro/.)