Real Estate Market Analysis: A Case Study Approach

Citation

Addae‐Dapaah, K. (2002), "Real Estate Market Analysis: A Case Study Approach", Journal of Property Investment & Finance, Vol. 20 No. 3, pp. 302-304. https://doi.org/10.1108/jpif.2002.20.3.302.1

The purpose of the textbook, as stated in the preface, is to provide “a practical guide for analyzing the market potential of real estate development” in response to expressed interest in a book “with a more hands‐on approach” by many instructors and practitioners. Thus, the book is not a compendium of economic theory, nor mathematical models. It is rather the application of relevant economic theory to real estate development problems via case studies. The student, in using this book, is immediately submerged in the rationale for, and meaning of, real estate market research, as well as the basic concepts of market research. Thus, the book attempts to bridge “theory to practice” to commend itself as a valuable textbook for instructors of real estate/business courses who use the case study approach.

This nearly 250‐page textbook may be divided into two main sections – theoretical and empirical sections. The theoretical section, which is composed of the first two chapters, deals with the meaning of market analysis, how market analysis fits into the development process, and the broad concepts of market analysis. The section highlights the increasing importance of qualitative analysis to counteract the ineffectiveness of statistical models to address the requirements of increasingly specialized and sophisticated real estate markets. Similarly, the authors poignantly deal with the relative significance of macro and micro analysis in the real estate development process.

The empirical section, chapters 3‐7, is devoted to case studies. Each of these chapters has three to four case studies to illustrate how the market study process can be adapted to suit specific product types. This includes, inter alia, specifying how the market areas differ for the various types of properties, the methods of analyzing supply and demand that are uniquely suited to each property type/subtype, and the data that are most appropriate for each type/subtype of property. For example, the market penetration factor is employed in the case study for multifamily rental housing project (Case study 3.1) while the Old Town Square condominium project (Case study 3.4) demonstrates the value of focus groups and surveys.

The seven chapters of the book are as follows:

1. (1)

   Understanding real estate market analysis.

2. (2)

   Basic approach to real estate market studies.

3. (3)

   Residential development.

4. (4)

   Office and industrial development.

5. (5)

   Retail development.

6. (6)

   Hotels and resorts.

7. (7)

   Mixed‐use developments.

Because the main aim of the book is to provide “instruction” through case studies, the section that deals with the fundamental principles is pithy. Explanations under the various subheadings are epigrammatic. This means that the ambitious student would have to read other textbooks (e.g. Appraisal Institute, 1993; De Lisle and Sa‐Aadu, 1994; Fanning et al., 1994) for a firm grounding in the fundamental principles of market analysis. However, what is lacking in the theoretical section is compensated for in the case studies, which are rigorous and educative. Although the case studies have been written by different people, they blend together in lucid writing, rigorous analysis, and integration of fundamental principles and knowledge with practice. An “overview” is provided for each chapter dealing with case studies which succinctly discusses the concepts that are employed for the case studies in the particular chapter. The two text boxes (pages 31 and 49), provide additional insight into an Internet GIS clearing house called MAP2MAP, and seniors’ housing, while the notes at the end of each chapter furnish the enterprising student with additional explanation, information and relevant up‐to‐date references for further reading.

The only limitation of the book is the lack of graphic models to illustrate some of the concepts in chapters one and two, given the brevity of the explanations. For example, market and marketability analysis form a continuum which may be illustrated graphically to promote a better understanding of the concepts. Similarly, the place of market analysis in the real estate development decision making/process could be portrayed graphically to complement the text. Notwithstanding this minor criticism, it is an excellent textbook on real estate market analysis. In consonance with the title of the book, the authors have achieved their goal of providing a practical guide (with sound theoretical underpinning) for analyzing real estate development. Devoid of mathematical/statistical models, the book is an ideal choice, especially for the non‐quants in the real estate discipline. This book, according to the authors, is intended for university students in schools of planning, architectural, real estate and business. As a lecturer in real estate, I consider it to be a valuable textbook for graduate students of real estate courses, while final year real estate undergraduate students could find it beneficial.