Macro Overview of Real Estate Development
by Kyle Cheung
The PEST (Political, Economic, Socio-Cultural, Technological) Analysis was developed by Francis Aguilar and primarily used in strategic business planning. It addresses macro concerns which could possibly affect a business’ future detrimentally or positively. At the very least, they provide an acute understanding of the business environment an organisation operates in. This allows familiar threats and to be tackled and identifies promising trends to jump on for a ride.
Stability and Anti-corruption
For the most part, politics in Singapore remains rather stable with few to no sudden shifts in power and policy. This forms a comfortable foundation for businesses to operate without fearing for loss on their investment. In addition to this, the government has a history of taking a rather strong anti-corruption stance, which makes business practices more straightforward and transparent. This may differ from country to country. Since regional property developers have cross-jurisdiction business interests, it might pay to adjust the approach from country to country.
Although it has already been something of a trend for countries to look out more and more for their own in recent years, the global pandemic has made it more urgent for governments to prioritise their own people and interests. As a result, property developers could face increased friction abroad in countries where governments want to prioritise the wellbeing of their homegrown property developers. In light of this, it is important to keep the organisation’s global workforce engaged by emphasising inclusion. A regular and steady flow of communication that informs all staff of a clearly stated and articulated purpose from upper management can also help to unify the workforce.
Recession & Pandemic
Though obvious, it is true that the ongoing recession hampers growth in many ways. As usual, fears over low to no returns can turn away some investors. However, those with enough foresight will see the lull period as an opportune moment to get into the game before things pick up again.
For property developers involved hospitality management, things may take longer to recover due to the hard cut-off on traveling and tourism. While there is no easy workaround in this area, some strategies such as catering to the country’s domestic tourism market could help to ease the effects of the downturn in the meantime.
Rise in Equity Crowdfunding
With information and financial literacy becoming more readily available, the global pool of investors has widened. People are beginning to have an understanding of investing at a younger age. Older individuals may have now become more interested as unfound fears become dispelled. As a result, property developers have a wider range of opportunities if it can find better ways to connect with this broader audience.
Equity Crowdfunding in Singapore falls under the Collective Investment Scheme which is regulated by the Monetary Authority of Singapore (MAS). MAS governs the crowdfunding activities under the Securities and Futures Act (Cap.289) and the Financial Advisers Act (Cap. 110). MAS controls equity-based crowdfunding the same way it controls debt-based crowdfunding. For both cases, the crowdfunding platform must have a Capital Markets Service (CSL) license.
As the standard of living continues to improve for newer generations in many countries, more people see the value of spending money for enjoyable experiences that would have previously been thought of as frivolous. Whereas in the past, main concerns around accommodations may have been security, hygiene, and accessibility—the crowd of today cares much more about having a pleasing, aesthetic, and shareable staycations that they can boast about. Hence, property developers in hospitality management should continue to cater to this crowd and target them in a more focused manner.
Forecasting demand, pricing, and return on interest in the realm of property development has always been an important skill. Since the world plugged in to the internet, data collection has been a part of our world. The upside of this is that when we have access to a well-curated and large pool of data, it is possible to make predictions with greater accuracy.
Because of this it will not only be possible to appraise the potential value of property. One can also streamline the strategic process around marketing property by targeting specific demographics with personalised promotional advertising that speakers directly to them. Although there is currently a lack of a well-curated and large enough pool of data, property developers should keep their eyes on such advancements in PropTech to give itself the edge.
Drones & Virtual Reality (VR)
While sometimes thought of as gimmicky, drones are capable of delivering a bird’s-eye viewpoint of larger developments that cannot be ordinarily seen by the average human. This can give an impactful and panoramic impression of scale that is otherwise difficult or impossible to translate with traditional videography. Likewise, VR footage allows buyers and hospitality guests to get as close a feel of the environment short of setting foot in the place itself—and during a period of time when safe distancing is important, this can be a valuable tool. Both technologies are of value, and property developers must weigh out whether or not they are worth the cost.
We’re Brand Developers. Let’s build something from the ground up: