24 October 2017
Vivek Sah, Director, LIED Institute for Real Estate Studies, University of Nevada addressed students of RICS School of Built Environment.
Prof. Vivek Sah in a lecture to the students of RICS SBE explained the importance and the core concepts of real estate market analysis and how it affects the different aspects of the sector: whether it is real estate values, development, underwriting, legal issues, project feasibility or evaluation. He also spoke about a 15- week programme that he had designed and developed for the students of San Diego University and how it would help international students too.
He took students through the lecture with the help of slides and examples. He explained how one has to look at all aspects such as market supply and demand analysis, economic advantage, location analysis, market trends, pricing model assumptions when one does market analysis in real estate.
He also described other key tenets of real estate market analysis: Economic base analysis, trade areas, demand estimation, supply analysis, data sources and analytics.
Mr. Sah corroborated the lecture with several instances such as- how a company that is looking at investing in a big space has to make a huge investment, perform due diligence or conduct market research much in advance. Mainly because once they make the investment; exit barriers are pretty high and expensive.
“So that's why these decisions have to be taken very carefully and after a lot of detailed analysis,” he explained.
Giving another example, he elaborated- if a company wants to set up a call centre in India, there are several factors which go into the decision making and it can take more than a year before they begin functioning. Take for instance; deciding on a suitable city and selecting the best location within that city. The company also has to make a demographic and an economic analysis within the place because the tastes and preferences of people are very different. Real estate and market analyses will indeed play a pivotal role in such decisions.
The real estate sector functions in a very different way than any other sector. This is because from the time the project is conceived to the time it hits the ground; it takes at least a couple of years.
“So during that time, things can change and evolve and if one has not planned properly or if a thorough market research has not been done, then he/she can get stuck with a lumpy asset and lose money,”
he said. It is necessary to do demand estimation and a supply analysis in this situation, he remarked.
He also talked about a software known as STDB which does census data, demographics data and superimposed GIS. It gives a bunch of reports that can actually run for a specific location. So once the location is entered, it gives information such as spending patterns on a specific retail category, the population for a trade area and the demographics break down, in terms of age income and gender.
He also talked about how terrorism can have an indirect impact on real estate.
“What happens is terrorists tend to attack or target high profile properties. As a result of this, investors are not ready to buy such properties anymore, because they don't want to be the next target and that's a big loss.”
He also affirmed that real estate property and asset management has a lot of demand in India. So there is a lot that you can learn by analysing aspects such as leasing, office property management, managing retail tenants, retaining tenants and portfolio choices.
This means that you now have to choose among the assets you’d want to keep. And if you have to dispose of those assets then you also need to be aware of the role of technology in making the property and asset management a better function.
He then spoke about the certificate program that the University of San Diego is trying to develop for RICS - Business Environment School of Real Estate. The objective of the international certificate is to expose the students to real estate environment curriculum and practices in the most evolved and developed real estate market in the world.
Vivek Sah is the Director, LIED Institute for Real Estate Studies and Associate Professor of Real Estate – Lee Business School, University of Nevada, Las Vegas. Prior to this, he was the Associate Professor of Real Estate, School of Business at Burnham-Moores Centre for Real Estate, University of San Diego. A Ph.D. in Real Estate from the Georgia State University, he also holds a Bachelor’s in Engineering from NIT, Rourkela, and an MBA in Finance from the Institute of Management Technology.