The Global Real Estate Industry

This article provides an overview of the global real estate industry, including its role in the economy, major competitors, and Porter's five forces analysis. It also discusses the market size, nature of the sector, and key issues affecting the industry.

The Global Real Estate Industry
Business Sector The industry plays a crucial role in UK’s economy. It helps in employing 1
million people and contributes in the economy around £ 94 billion which £
5.4% of the total economy
Some of the major competitors in this field are Savills, Ability Group, ZPG ltd.
and many more.
Savills- It is one of the well-known real estate company which was founded in
UK in 1855. The company deals in various services like buying and selling,
consultancy, renting, property management and many other services.
Ability Group- Ability group is a British property company which was founded
in 1996 by Andreas Panayiotis. The company is based in Brentford. It owns
7,000 residential properties which are worth around £1 billion.
To understand more about the real estate market situation, Porter's five forces
can be practised in this scenario.
The mentioned analysis helps in identifying the competition and other factors
that affect the whole industry. However, the competition analysis of industries
works differently. It can be calculated on the basis of changes and the
development of the industry. It is consisting of five elements which are threat
of new entrants, bargaining power of buyers, bargaining power of supplier,
rivalry amongst the competitors and threat of substitute products.
Business Sector is also Known as corporate sector is a part of the economy which is
been made by various companies. It is distinguished in many ways. Few of the
economists divide it by corporate, non-profit organisations and government. Whereas
the majority prefers to define it in three broad sectors which are Primary sector,
Secondary sector and tertiary sector.
Primary Sector- This sector includes extracting and harvesting of natural
products like agriculture, mining, etc.
Secondary Sector- Secondary sector involves manufacturing and processing
the goods that are produced by primary sector.
Tertiary Sector- It is consisting of providing services or delivering the final
product in the market like retail service, entertainment, food outlets, etc. Let us now
study more about real estate industry.
Real Estate Sector- Real estate as a business point of view is the profession that
deals in buying, selling, or renting of various types of properties like building,
housing, land, etc. It is a legal term that is used in jurisdiction which is obtained from
English common law.
The majority of building structures in UK are private housing buildings. However,
the prime concentration of the industry in UK is on commercial estate as it has a
value of £1,662 billion. The medium of the financial return is usually in the form of
rent which is received by the private rented sector i.e office, retail, medical, hotels
and leisure.

Threat of new market entrants- The real estate market
is one of the unique market which is comprises of high
investment, high yield, and high risk. It is different from
construction industry and is developing really fast. The
total number of registered estates agencies are 16,547 out
of which 66.5 are registered in London. Such industry is
always in threat of new entries as the profit is really high.
If they enter the market, they are going to erode the profit
of the whole sector.
Threat of Substitutes- Currently, the real estate market
of UK is still emerging. The target customers are always
changing due to change in the consumption pattern of the
customers. The transformation in the customers need and
high price range of the properties provides opportunities
to the substitutes. Therefore, the strategy of product
differentiation can be implemented such as high quality
or different management services.
Bargaining Power of Supplier- The suppliers of the real
estate are building material, lands and buildings, and
equipment’s. The suppliers of general building material
and equipment’s have weaker bargaining power because
their various suppliers who might agree to give the same
quality of the product on lesser price, whereas the
providers of the lands have high bargaining power.
Bargaining Power of Buyers- The buyers in the real
estate sectors are individuals, organisations, families or
the government departments. The bargaining power of the
buyer can be distinguished by the type of buyer for the
industry. The private consumption buyer will spend more
time on bargain and vice versa.
Bargaining Power of Buyers- The buyers in the real
estate sectors are individuals, organisations, families or
the government departments. The bargaining power of
the buyer can be distinguished by the type of buyer for
the industry. The private consumption buyer will spend
more time on bargain and vice versa.
Rivalry Among the Competitors- The main
competitors in this field are the agencies which are
providing similar properties to the customers in the
same location. The intensity of the competition in the
market mostly depends on factors like number of
competitors, product differentiation, market demand and
supply.
Market Size- The industry has been growing since last
5 years, though the revenue is tensed. The revenue of
the industry is expected to grow at an annual rate of 1%
over the 5 years from 2018 and is expected to reach
£11.1 billion. The revenue has increased since 2015-16
because of various government reforms and initiatives.
The total number of businesses dealing in the real
estates are 20,823 which had led to increase in the
employment rate. The number of employment created
by this field is 1,58,619.
Nature of Real Estate sector- The real estate sector
deals in buying, selling and renting the properties or
land. The process involves intermediaries which are
called real estate agents. The industries include various
activities like giving advice on the properties, acting as a
mid-man between the client and the property and
helping the customers rent, buy and sell their property.
Porter's five forces
Key Issues-
The increased stamp duty has resulted in a fall
in residential properties transactions.
The decreased number of residential
properties business will lead to a certain fall in
the total revenue.
The interest rate is expected to rise near by
0.25% in late spring, which concludes that the
base rate would be 0.75%.
Direction-
The supply of new housing properties is
expected to raise in the next 5 years to meet
the future demand
The stamp duty should be deducted to
promote the retail business transactions.