The real estate market study gives you an overview of the project you are considering and its long-term potential.
In short, it works as a tool that prevents risks for both you and the company. real estate developer with which you plan to work.
Fortunately, With this type of study you don't have to "invest blindly", It allows you to better understand the real estate market and make strategic decisions based on appropriate data analysis.
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What is a real estate market study?
A real estate market study is a detailed investigation conducted to obtain sufficient information on the viability of a real estate project.
It functions as a process during which key information is gathered on supply and demand, pricing, competition, and many other factors that directly influence the purchase, sale, rental, or development of properties.
What is the purpose of market research in the real estate sector?
Conduct a market study It helps you make informed decisions in the real estate sector. Keep in mind that this type of research is perfect for:
- Determine market conditions with all their trends
- Know the existing supply and demand
- Collect information about buyers' preferences
- Identify investment opportunities with the highest capital gains
- Evaluate the specific opportunities and threats of a real estate project
- Knowing the market value of a property
- Identify ideal areas for investment projects
- Conduct a comparative analysis of sales prices
- Knowing whether a specific asset type is in demand or not
- Estimate the return on investment and profits of a real estate business
- Determine whether the marketing price is competitive in the market
- Properly calculate the price of each square meter of the land you wish to acquire for sale or rent.
To sum up the above, Real estate market analysis can help you reduce the risk of your investment, Since it provides you with enough objective data to know whether you are taking steps on “solid or sandy ground.”
Elements that make up a real estate market analysis
These elements are so important for understanding the market that if we were to compare the real estate market to a puzzle, each of these points would be an essential piece to putting it together:
Offer
It allows you to know the options available in the market, their characteristics, who is the strongest competition and what strategies they use to achieve success.
This type of analysis is key, as it helps you identify weaknesses in current offerings so you can leverage them to your advantage and gain a competitive advantage.
Demand
This aspect of the research It focuses on customers, with their behavioral patterns, purchasing patterns, and criteria for choosing a property in the housing or commercial market.
It also assesses whether potential buyer interest is stable, increasing, or decreasing, which is very important for your decision-making as an investor.
Evolution of the area
Analyze urban growth and demographic trends that may influence property demand in a specific area.
Also It takes into account the local economy, what people's jobs and income are like, what their level of security and quality of life is, since all these factors are decisive when it comes to pricing properties.
In addition, it evaluates future projects and government plans that could influence the development of the area, thereby gaining a more complete view of its medium- and long-term potential.
Target audience
This element It is based on identifying people who might be interested in acquiring a property, Whether to live or establish their business. In short, we're talking about the end users of the real estate project, so you need to know as much as possible about them, for example:
- What are their ages, genders, and where do they live?
- What kind of profession do they have and what is their income level?
- What is your purchasing behavior?
- What goals, challenges, and frustrations do they have?
Keep in mind that properly identifying your target audience can save you a lot of headaches, as it allows you to know if your investment project is aimed at the right people.
Prices
To conduct a truly effective market study It is essential to take into account the prices of properties located in the same area where your asset is.
That is, you should evaluate the square footage of the properties adjacent to yours to determine whether the project's proposed sale price is realistic or needs to be adjusted.
Market trends
It's an essential factor if you're thinking of investing in a real estate development, because it gives you a measure of its potential.
In other words, It is not advisable to bet on a business with a low or declining trend because it means that sales are increasingly declining.
On the other hand, if the trend is on the rise, it's the perfect time to invest in that project, as it "promises" to be very profitable.
Internal, external and legal factors
When conducting market research, it's equally important to know what factors can influence the project's success. Here we briefly address some of the factors you should definitely consider in your market research:
- Internal factors: It refers to the weaknesses and strengths of the project itself. To determine these, it's important to rely on the SWOT matrix, a technique that provides insight into the elements that can help or hinder a company's operations.
- External conditions: includes all the factors that can positively or negatively influence the project.
- Legal requirements: It addresses all regulations related to the sector, its trends, and how these are expected to influence the real estate market.
How to conduct a real estate market study?
To conduct a thorough real estate market analysis, you must consider all the elements mentioned above and organize the analysis in stages:
1. Define the area to be evaluated
During this stage it is important that you establish which specific area you want to include in your study.
Once you've done that, focus on understanding its square footage, its potential for economic development, the neighborhood's residential areas, and the value of properties for sale.
This information will give you a broad and objective view of the potential of the area or neighborhood.
2. Collect market data
At this point Ideally, you should be able to obtain as much information as possible. so that you have a more complete view of the market.
For example, you need key data such as:
- What are the dimensions of the property you're considering? Is it designed for commercial or residential use?
- What prices are being handled for similar properties in the area?
- What are the current marketing and rental prices?
3. Analyze supply and demand
In this step You can analyze two elements together: supply and demand, since they are closely related to each other.
Here, it's very important to know the number of available properties and the number of buyers or tenants interested in them, and to specify whether they are residential or commercial properties.
4. Study market trends
It is also a highly relevant phase for any real estate market research.
And it is that It allows you to stay up to date on price changes, buyer preferences, and new construction or developments. that may affect the market in the short or long term.
5. Evaluate the competition
Look and analyze what your competition is doing It will help you understand what tactics they use and which ones they don't, to achieve their business objectives.
In turn, the information you gain from this assessment gives you a measure of what you need to do to outperform your competitors and avoid making the same mistakes they're making when setting prices or implementing their marketing strategies, to name a few of the most important points.
6. Conduct a SWOT analysis
It is a technique that can help you understand if your investment is safe or at risk, since If the weaknesses outweigh the strengths, it is not a good project. and you should discard it.
Without a doubt, evaluating the internal and external factors that can influence the real estate market will allow you to identify areas for improvement and new business opportunities.
7. Analysis and interpretation of data
Once you've completed the previous series of steps, you'll have a comprehensive view of the market that will allow you to objectively determine whether the project is viable or not.
At this point You can now summarize the study's findings with graphs and text, interpret data and offer clear recommendations on strategies to follow, suggested prices, market segments to focus on, and potential risks to consider.
A real estate market study is a very useful tool that you should have on hand.
Real estate can be very profitable; you just have to evaluate each specific business to see if it has the potential you're looking for.
We know that a real estate market study is the first step to a successful and profitable project. Contact us and let's talk about the options we have available for you as a developer.
