Assessment of the Rise and Fall of Real Estate Developments in Developing Countries

This dissertation proposal aims to assess the rise and fall of real estate developments in developing countries and the reasons behind the respective trends. It explores the impact of economic growth, investment levels, political stability, and demand-supply gaps on real estate development. The study also examines the implications of these trends on the overall economy and housing crisis in developing nations.

ASSESSMENT OF THE RISE AND FALL OF REAL ESTATE DEVELOPMENTS IN
DEVELOPING COUNTRIES AND REASONS TO THE RESPECTIVE TRENDS.
NAME OF THE STUDENT
REGISTRTAION NUMBER/ COLLEGE NUMBER
A DISSERTATION PROPOSAL
DEPARTMENT OF CIVIL AND CONSTRUCTION ENGINEERING
NAME OF THE INSTITUTION
UNITED KINGDOM
SUPERVISOR:
JULY 2019

CHAPTER 1: INTRODUCTION
1.1. Background
The instruments that are fit for being put resources into or being possessed can be sorted into
real or individual property as indicated by law. Real properties or estates are immovable in
nature – they will in general be fixed in a geological area. Individual properties are versatile
and can be substantial or elusive. A substantial resource is an advantage that can be felt or
touched or equipped for being taken care of physically. For instance, furniture, knickknacks,
vehicles, equipment, crude materials, merchandise and so on. An intangible resource is a
thing that can't be felt or touched or kept in a safe. For instance, shares, licensed innovation,
bank store, innovation and creation, stocks, brand, bond, generosity etc. Real estate is an
unfaltering resource or property that is fixed for all time to one area. This includes land and
anything that is based on the land. It additionally incorporates whatever is growing on the
land or that exists under the essence of the land (Nayyar, 2016).
Land here indicates dry piece of the earth and the water body, on the off chance that it isn't
administered against from being an individual property by government. All appurtenances on
a land are land or real property since they are unexpected to the arrive on which the benefits
stand or fall under. Real estate includes land, just as any physical property or upgrades joined
to the land, including houses, structures, finishing, fencing, wells, air directly over the land,
mining directly under the land and so forth. Empty land and private parcels, in addition to the
houses, outbuildings, decks, trees sewers and apparatuses inside the limits of the property are
all referred to as land (Mataen, 2012). These days, with current strategy for development and
technology, mobile houses might be alluded to as a major aspect of a land.
Real estate has various classifications called land uses. Rel estate can be residential,
recreation, industrial, commercial, office, entertainment, shopping center, sports, medical,
educational, the travel industry, transportation, urban, local and so on ("Dynamics in real
estate development: on the relationship between residential and commercial real estate
markets", 2012). Investors largely tend to put resources into the bit of land that creates higher
rates of profit for investment popularly termed as Return on Investment (ROI). Return rates
of profitability on land rely upon 'yield'. Yield is a significant way of estimating the future
proceeds on a scheme (Chattaraj, 2019). Property yield is predominantly significant in real

estate investments as capital development rates are not more often than not the equivalent for
the same measure of investment on various land utilizes in a similar property showcase
(Blakeney & Mengistie, 2017). So, the returns you get now and later on are key factors in
working out whether to put or not in a type of real estate.
Real estate advertises in developing countries are disordered, underfunded and unprincipled.
The market is evident of all kinds of individuals so long as they have interest of real estate
developments or investments in a locality (Gbadamosi, 2019). This is the reason there are
such huge numbers of relinquished real estate projects, legal suits and higher incidences of
collapse of buildings. The sector has an exceptionally high deficit performance as exhibited
in figure-1. The mortgage rates are consequentially very high hence majority continuously
are unable to afford decent housings.
Figure-1. Affordable housing supply shortage in Africa.( accessed on 22nd June 2019 from
https://www.google.com/search?
q=Affordable+housing+supply+shortage+in+Africa.&client=opera&hs=5ed&source=lnms&t
bm=isch&sa=X&ved=0ahUKEwjuhdbNyfziAhURUhoKHe89DrcQ_AUIECgB&biw=1326
&bih=658#imgrc=r745aCj6aG_XQM: )
1.1.1. Real estate development

Real estate industry, similar to some other industry, experiences constant advancement.
Rustic urban relocation has been noted to be key interest driver of both private and
business properties developing countries. Thusly, demand and supply mismatch happen.
The situation is aggravated by wastefulness on the supply side as a consequence of
difficulties going from absence of financing mechanism and credit capital, unattractive
loans and interest fees, low earnings and widespread unemployment among populations,
issues of land acquisition and costs of building materials in most developing nations
(Needham, Kruijt, & Koenders, 2018). Real estate development can be estimated through
various methodologies. One of the approaches is to utilize trade stock value records.
Records are normally utilized as benchmark when estimating offers and fixed intrigue
stock execution. They are connected in the property market however in a constrained
extension when contrasted with financial exchanges basically because of inaccessibility
of information. Attributable to the subjectivisms of numerous methodologies utilized in
property valuations, ideally property index ought to be derived from a context free of
impact from any one institutional financial investor where pay, capital performance
what's more, complete performance is divided and considered independently for every
property classification ("Real estate development between stagnation and modernization",
2012).
1.1.2. Economic growth
Economic growth can be characterized as the expansion in the complete yield of an
economy and can be estimated utilizing (GDP) with an irrevocability point of improving
standard and personal satisfaction among the people. This happens when the yield per
capita exceeds population. Haller (2012) characterizes economic growth as procedure of
developing the sizes of nations' economies, the large-scale monetary markers especially
Gross domestic product per capita, efficiently and that outcomes to a constructive
outcome on the social-financial area. In this manner, economic growth is the growing of a
nation's economy (Ricolfi, 2018). Development in a given economy can be estimated
utilizing GDP, which appraisals showcase throughput by summing estimations of definite
products and enterprises made and traded for cash inside a given timeframe (Barańska,
2013). Consequently, the rate at which economy develops is characterized as the rate
change in the created number of products and administrations starting with one year then

onto the next including real estate developments and improved living standards, increased
employment etc.
1.2. Problem statement
Economic activities have a crucial bearing on real estate development couples by market
stability of related assets as typical in industrialized nations such as the united states.
Industrialized nations contribute significantly real estate development in developing nations
as most investors in developing countries originate or source for funds, aids, grants from
developed countries. In doing this, a healthy economic performance is enhanced hence a step
towards managing the ever-widening mortgage crisis in developing nations (Rothenberger,
Schulte, Bone-Winkel, & Schäfers, 2015). It is no doubt that real estate development is
indeed linked or a factor of economic development in a country. This explains why real
estate development is more advanced in developed countries than in developing countries. In
recent years, there has been a marked trend of increased real estate development in
developing countries as opposed to past eras (Albayrak, 2015). While this rise in real estate
development and investment has helped manage the housing crisis in most cities among
developing nations, it brings with it setbacks to host nations. Most of these projects are
funded by developed nations especially China which has invested heavily in infrastructural
development and improvement extensively in Africa. This has resulted to increased and huge
government loans and debts which in most cases have turned not feasible as payments of
such loans become unsustainable based on economic performance of the benefitting
developing countries. Also, government budgets continue to be huge with huge chunk
directed towards infrastructure and real estate development projects. In reality, the returns of
these projects and the countries Gross Domestic product remain meagre and unsatisfactory.
The rise in real estate development on general is perceived to outcome positive economic
growth in a country and theoretically help solve issues of employment and the genera
housing crisis common among developing nations. The implications of the rise in real estate
development is however shallowly understood as well as the motivating factors hence the
reasons for such trends. Nevertheless, it should be noted that in selected cases of developing
nations, reals estate development is on decline especially due to economic instabilities,
insecurity and political instability and lack of government goodwill, issues of corruption etc.
(Adejumobi, 2018).

1.3. Justification
The rise/ fall of real estate development in most developing nations remain undocumented in
the recent past hence no authoritative arguments or publications exists.
1.4. Objectives
1.4.1. General objectives
To assess of the rise and fall of real estate developments in developing countries and
reasons to the respective trends.
1.4.2. Specific objectives
To determine the level of real estate development in most developing countries in the last
ten years.
To determine the reasons for the rise/ fall of real estate development in developing
nations in the last ten years.
To assess the reasons behind the rise/ fall of real estate development in developing
nations in the last five years.
To assess the implications of the rise/ fall of real estate development in developing
countries.
1.5. Research hypothesis
Real estate development in developing countries is evident in most third-world countries and
the rise/ fall of this venture can be attributed to economic growth, level and ease of
investment by investors, economic and political stability, demand and supply market gap for
real estate developments, and availability of capital.
1.6. Limitations of research
Due to limited time and financial constraints, only a case study of selected developing
countries shall be carried out hence exhaustive research would be improbable.
The difference in economy sizes of different nations as well as disparity in natural resource
distributions such as land makes fair comparison and general assessment difficult.
Inability to assess primary and up to date verifiable information on real estate developments
in developing countries.

CHAPTER 2. LITERATURE REVIEW
Worldwide megatrends will change the land scene extensively in the following six years and
past. While a considerable lot of the patterns featured are as of now apparent, there's a
characteristic propensity to belittle how much the land world will have changed in the near
future. By 2020, the 21st century's extraordinary relocation to the urban communities will be
well in progress. Urban communities will swell over the quickly developing nations in Asia,
Africa, the Middle East and Latin America. Indeed, even the created Western countries will
urbanize, though at a slower pace (Ciotti, 2013). Be that as it may, not all urban areas will
thrive. While some turned out to be incredible focuses of riches creation in a multipolar
world, others are probably going to fall flat.
The volume of infrastructure and real estate development will be tremendous, growing the
world's stock of institutional-grade real estate. Worldwide development yield is relied upon
to practically twofold to US$15 trillion by 2025, up from US$8.7 trillion in 2012 (Diop,
2017). Emerging markets in Asia will be the quickest developing area, yet sub-Saharan
Africa is required to be the second most astounding.
However, the way of thinking of 'construct it and they will come' won't demonstrate all
around effective. A few urban areas will develop and end up inventive centers, generators of
financial development. Others will wreck riches, with poor framework, ghettos and wild
wrongdoing. Regardless others will be phantom towns (Seger & Pfnür, 2017). In certain
nations, the thickness of principle urban areas will push individuals away, to rustic conditions
or satellite urban communities (Stevenson, 2013).

Figure-2. Global population trend from 1950 projected to 2050 (Harper, 2018).
In China, India and the Middle East, whole new urban areas will be constructed, utilizing
eco-effective advances to decrease their natural effect. Governments and the investing
network may need to cooperate to reserve and construct these urban areas and their
foundations. Masdar City in Abu Dhabi, Jaypee Sports City in India and Sejong City in
South Korea are only a couple of the altogether new urban communities. In any case, it's
impossible that the majority of the new urban areas arranged will pull in the inhabitants
estimate, as the high opportunity rates in a portion of Asia's most current urban areas as of
now appear.
China, the world's most crowded country, will see the greatest movement of all. A huge
number of individuals consistently will live the new 'Chinese dream', moving to the urban
areas looking for a prosperous middleclass presence. Crosswise over Africa, the Middle East
and Latin America, as well, the urban communities will swell as individuals move looking
for a superior life (Kohlhepp & Kohlhepp, 2018).
Be that as it may, urbanization isn't only a developing markets' marvel. The built-up world's
urban areas are developing at a tremendous rate also. London's populace, for instance, is
estimate to ascend to 10 million by 2031, up from 8.3 million today. Much of this populace
rise originates from the overspill of the new rich in, and from, developing markets, looking
for an extravagance home in Europe. In 2013, some US$35.7 billion of cross-fringe capital

was put resources into London, making it the top beneficiary of capital worldwide. In the US,
improvements, for example, New York's Hudson Yards Redevelopment Project will grow the
urban areas (Manganelli, 2014).
Statistic movements will influence interest for land on a very basic level. The expanding
middle class urban populaces in Asia, Africa and South America will require unmistakably
all the more housing. In the interim, the propelled economies' maturing populaces will
request pro sorts of land, while their prerequisites for family homes will direct.
In spite of the fact that Africa's populace will at present be developing quick in 2020,
Europe's populace development will slow down. The working classes are anticipated to
develop by 180% somewhere in the range of 2010 and 2040, with the most astounding extent
of white-collar class individuals set to live in Asia as opposed to Europe when 2015. What's
more, somewhere in the range of 2010 and 2020, more than one billion extra middle-class
purchasers will develop globally.
Urban communities will draw in the youthful middle classes, particularly in developing
markets. As serious challenge for space increments urban thickness, lofts are probably going
to contract. Designers should turn out to be progressively creative about how they use space.
The developed economies' maturing populace will restrain house value rises. The Bank for
International Settlements' examination of cutting-edge economies gauges that the US will
endure valuing collapse averaging around 80 premise focuses per annum in real costs
throughout the following 40 years, with the effect more noteworthy still in mainland Europe
and Japan ("Historical Perspective of Real Estate Development", 2012).
Most developing countries are already in a fix characterized by weakened and poor economy
to support the consequential real estate developments. For this reason, most of these nations
continue to apply for bailout from the international Monetary Fund and accept unattractive
huge Chinese loans hence piling on the debt (Seraj, 2015). For instance, lets consider the case
of Ghana. Once hailed as a model for African development, Ghana has as of late been losing
its sparkle with dwindling economic performance, swelling inflation, and mounting
government deficit. Monetary administration under the present government has been weak.
Recently, the administration was compelled to reported a choice to select an IMF bailout so
as to spare the sickly economy from sinking further.

In July 2014, the nation's yearly inflation rate flooded to 15.3%, the largest amount in four
years, basically fueled by increments in the cost of utilities and fuel, as per government
figures. This was above national bank's expansion focus of 13%, give or take 2%. Expansion
is required to rise further after the collect season if the administration neglects to moderate its
obtaining. By end-March 2014, the nation's public debt was at GHS58.4 billion (US$16.12
billion), comparable 55.4% of GDP, as indicated by the national bank. Ghana (pop. 25.5
million, GDP/top US$1,730) is an exceptionally poor nation. Once in the past known as the
Gold Coast, it was the principal nation in sub-Saharan Africa to pick up autonomy from
Britain in 1957.
Examiners expect land interest in Kenya to get in the coming months, with both
neighborhood and outside firms putting resources into the division. “We hope to the real
estate industry to keep up the expansionary pattern because of the significant yields from the
business averaging at over 24.3 percent as at December 2017, interest in foundation, and
proceeded with development of the cordiality and the travel industry sectors," Cytonn
Investments said in an ongoing report. Recharged enthusiasm for property investments come
when the government is trying to create a million low cost housing across the nation over to
facilitate the housing deficiency that stands at 1.85 million units ("If the world is flat, why
isnít real estate?", 2015). The administration has spread out a detailed ease housing procedure
that looks to bring into the market new homes going for as meager as Sh500,000. As
indicated by Transport, Urban Infrastructure and Housing Cabinet Secretary James Macharia,
the State will give land to private speculators who will at that point exploit different structure
advancements and economies of scale to convey "affordable" homes for residents. This
comes in the midst of ongoing disclosures that house costs in the nation have recorded ten
times ascend in the previous seventeen years – pushing a lion's share of Kenyans into ghettos
(Ilondanga &, 2018). Kenya has delighted in a development blast for as far back as decade as
property engineers hurry to stay aware of a quick rising populace and an expanding interest
for urban housing.

CHAPTER 3. RESEARCH METHODOLOGY.
3.1. Introduction
This chapter entails research design, population of the study, data collection, and data
analysis using relevant analytical models and tests.
3.2. Research design
A research design is a plan indicating the methodologies and systems for data collection and
breaking down data required to encourage the examination. A spellbinding exploration points
at giving a precise and useable portrayal of the factors identifies with or are significant to the
research objectives. An unmistakable research tries to give precise depiction of discoveries
made on a marvel. It is worried about the present, and endeavors to decide the status of the
marvel under study.
3.3. Population of the study
A population alludes to all individuals or things with the attributes that a specialist expects to
think about. The examination population shall include residential and commercial real estate.
The study shall consider both residential and commercial real estate, a key parameter used to
generate property index in most developing nations.
3.4. Data collection
The research shall basis mainly on secondary data spanning from the year 2014. The data
shall mainly be of property index of developing nations usually published on quarterly basis
on respective government websites. Information on peer reviewed journals and authoritative
publications such as books, government manuals shall be referred to during this
investigation.
3.5. Diagnostic tests
The study shall assess multicollinearity by utilizing variance factors of inflation while
autocorrelation between obtained figures on the depicted trends shall be assessed using the
Durbin Watson statistics. Other tools such as skewness and kurtosis could as well be used to
understand the normality.
3.6. Data analysis

This shall entail examination of collected results and establishing informed inferences and
deductions on real estate development in developing countries. Inferential and descriptive
statistics shall be employed using STATA program to aid in the analysis.

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