REAL ESTATE IN DEVELOPING COUNTRIES.

REAL ESTATE IN DEVELOPING COUNTRIES: RISES AND FALLS AND REASONS BEYOND.

REAL ESTATE IN DEVELOPING COUNTRIES
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Table of Contents
Chapter 1: The Introduction...............................................................................................4
1.1 The Broad field of the research................................................................................4
1.2 The specific area of the study..................................................................................4
1.2.1 The research issue............................................................................................4
1.2.2 Significance of the problem................................................................................5
1.2.3 Importance to the discipline...............................................................................6
1.3 Statement of the research aims...............................................................................7
1.4 An overview of the methodologies...........................................................................7
1.5 Structure and contents.............................................................................................9
Chapter 2: The Background............................................................................................10
2.1 A contextual discussion..........................................................................................10
2.1.1 Background to the study..................................................................................10
2.1.2 In-depth discussion of the research problem...................................................12
2.1.3 Relevance of the discussion............................................................................13
2.2 Literature review.....................................................................................................15
2.2.1 Factors affecting the development of the real estate......................................15
2.2.2 Contribution to economic development...........................................................18
2.2.3 Current status and future scopes.....................................................................20
2.2.4 Techniques and methods for improvement.....................................................23
2.2.5 Applicable theories...........................................................................................26
2.2.6 Benefits and challenges of real estate investment in developing nations.......28
Chapter 3: Methodology..................................................................................................32
3.1 Introduction.............................................................................................................32
3.2 Research questions................................................................................................32
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3.3 Research aim and objective...................................................................................33
3.4 Research onion......................................................................................................33
3.5 Research Philosophy.............................................................................................34
3.6 Research approach................................................................................................34
3.7 Research design....................................................................................................35
3.8 Population of the study...........................................................................................35
3.9 Research strategy..................................................................................................36
3.10 Research method.................................................................................................36
3.11 Sampling method.................................................................................................37
3.12 Data collection......................................................................................................38
3.13 Data Analysis.......................................................................................................38
3.14 Diagnostic test......................................................................................................39
3.15 Research validity..................................................................................................39
3.16 Research ethics....................................................................................................40
3.17 Research limitations.............................................................................................41
3.18 Reasons of adopting this approach.....................................................................42
3.19 Summary..............................................................................................................43
Chapter 4: Data Analysis.................................................................................................44
4.1 Details of data analysis..........................................................................................44
4.1.1 Discussion of data and sources.......................................................................44
4.1.2 Sample structure and size...............................................................................45
4.1.3 Principle findings..............................................................................................46
4.2 Discussion..............................................................................................................56
Chapter 5: Conclusion.....................................................................................................62
5.1 Summary of findings...............................................................................................62
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5.2 Linking with questions and literature......................................................................63
5.3 Effectiveness of the study and relevance of the findings.......................................64
5.4 Opportunities for future research...........................................................................65
Reference list...................................................................................................................67
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Chapter 1: The Introduction
1.1 The Broad field of the research
This study provides a comprehensive overview of the industry of real estate in the
developing countries. This study is large in scope for it provides extensive knowledge
regarding the geographical and legal status of the housing sector. Real properties are
confined to a specific geographical location because they are immovable assets and of
that specific area. High maintenance for real properties are substantial or tangible and
require physical ministration. Over the past years, the real property industry has
vigorously developed in some of the developing countries. The agricultural sector is the
leading industry in almost all developing country after which the real estate industry
drives maximum investment and employment. However, most activities associated with
the housing sector are still categorized into the ‘unorganized sector'. The intervention of
local developers and small contractors are largely responsible for this. The maximum
investment in the housing sectors of the real estate industry is catered by small
investors due to which it is yet to qualify as an organized sector (Squires et al., 2016).
Compared to the other sectors, the deployment of expertise, qualified professionals and
resources in the sector of real estate has been impeded which challenged its rapid
growth. This study analyzes the problems and finds specific recommendations with
which the problems could be mitigated. It is also concerned with the evolution of this
sector in the developed countries and the factors responsible for its growth.
Furthermore, this study highlights how this sector differs between developing and
developed nations.
1.2 The specific area of the study
1.2.1 The issue of research
The concern of the current study is to evaluate the growth and development of the
housing sector or the property industry in developing countries. The evolution of the real
estate industry in the developing countries has been remarkable which led to a large
number of investors in this sector through the last few years. The growth of office
buildings, shopping malls, industrial buildings, medical facilities, educational facilities,
and recreational facilities has influenced the standard of living in developing
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communities. However, investing in the real property industry could be challenging in
developing countries. Real estate requires large areas of land on which it would be
premised and the land property is unique, fixed and scarce. The existence of
competitive investment of the different sectors with varying returns on investments
compared to the housing sector could challenge the development of the real estate
sector.
The yield from the housing industry relies on several aspects like classifications of the
real estate housings on the basis of their capital outlay, location, type, risk analysis, and
analytical forecasting. These factors are generally considered by investors. Fraudulent
activities associated with transactions necessitate the involvement of professional
experts. However, in the developing countries, the intervention of inexperienced and
unprofessional small investors has led to an unorganized development of the industry.
These issues are not prevalent in developing countries because they involve
professional builders who are specifically expertise in this discipline. This study has
addressed this issue for finding ways with which it could be mitigated. Furthermore, the
prevalence of these issues hinders the growth of this sector which serve as a major
source of employment in the developing countries (Kauškale & Geipele, 2017). The
growth of this sector also influences the economy of developing countries and hence it
is important that the government addresses the issues and find ways for improvement.
The central problem is corruption which has resulted in legal issues, relinquished or
incomplete projects. It is due to the same reasons the number of collapsing incidents
are increasing the developing countries. The quality of the real property industry in the
developed countries is more stable and directed towards national development.
1.2.2 Significance of the problem
The problems that have identified regarding the development of the property sector in
the developing counties are significantly important. The real estate sector supports the
commercial development of a nation which is especially needed in developing countries.
However, the prevalence of the issues might hinder the growth of the sector and thus
affecting the economic development of the nation. In most of the developing countries,
the agricultural sector is the integral contributor to economic growth followed by the real
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property industry. The property industry is a major source of employment in developing
countries for its huge contribution to corporate development. Over the last decade, the
corporate sectors as a discipline have rapidly evolved in availing a professional
approach for meeting the requirements of the multinational corporations that operate in
a competitive environment. The corporate sectors are largely responsible for the growth
and development of a nation and therefore the problems associated with the real estate
industries are significant and require immediate monitoring.
The government must take effective actions for mitigating the issues associated with
these sectors. This study represents the factors that are influenced by the growth of the
housing sector to reveal the relevance of it in immediately addressing the issues. The
advertising of real estate in most of the developing countries is severely underfunded,
disordered and unprincipled (Glaeser et al., 2017). These factors have been responsible
for the legal suits, relinquished projects and incidences of accidents and collapses. The
rate of house mortgage is increasing as a result of this for the sectors' deficit
performance in the developing countries. Thus it is significantly required to mitigate
these issues as it could brew associative problems like unemployment and financial
distress of the lower classes as a result of high price and high mortgage.
1.2.3 Importance to the discipline
The current discipline is concerned with the improvement and development of the real
housing sectors in the developing countries. The problems have been identified by the
researcher and these problems have increased the scope of the research. It has
enabled the researcher to explore some key areas that have remained understudied so
far. The research problems have allowed the researcher to look for ways that could
mitigate the issues. It also develops the foundation on which this specific study would
be based. The identification of the research problem is relevant for the researcher is
required to address the research problem throughout the study. In fact, the entire study
is based on the identified problem. Now, the researcher would try to find a connection
between the problem and the fundamental area of the study which is the rise and fall of
the housing industry in the developing countries.
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The problems of the research have allowed the researcher to develop an extensive idea
of the dynamics in the development of real property estate. This study explains the role
of the investors in subsidizing resources into the land property on which the buildings
would be premised for increasing the ROI (Cao & Porter-Nelson, 2016). Therefore, the
researcher gains a constructive idea regarding how the profit margin could be
increased. The researcher has also been able to compare and contrast the property
sectors in the developing countries and the developing countries for the identification of
the growth factors and performance indicators. Finally, the researcher is able to connect
the different patterns for the analysis of the findings that have been obtained from
general and scientific observations. Therefore, the problems of the research are
significant to the discipline and the researcher has conducted an extensive search for
analyzing the problems.
1.3 Statement of the aims
The aim of the current research is the evaluation of the rise and fall of the real estate
industry in developing countries for assessing its growth over the last decade. The
research study aims at finding an issue for demonstrating the factors that have
consequently affected the enhancement of the housing sectors in the developing
countries.
1.4 An overview of the methodologies
Research methodology indicates at the systematic and scientific planning of the
implementation of the current research. It comprises of a set of methodologies that are
deployed for the completion of a formulated study. In the current study, the researcher
has framed planning by employing some specific methods that comply with the
requirements of this study. It determines how the researcher has collected data and
how the findings have been evaluated and analyzed for obtaining numeric outcomes.
This section provides an overview of the methodologies that have been applied in this
study for the completion of the research.
The researcher has employed the mono method intending to gather data mostly from
secondary sources. A part of the data has been gathered from the chosen sample
comprising of both commercial and residential real estate. A key parameter has been
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used by the researcher for generating property index of the countries that are labelled
as developing nations. The researcher has chosen secondary analysis of data because
this is a critical research area and individualistic opinion would not be able to cover the
broad scope. Therefore the researcher has relied on an extensive search from
secondary materials that are focused on in-depth analysis.
The researcher intends to gather fresh data for which the collected data are not older
than 2014. The researcher has collected data and information on the property index
depending mostly on the government websites that publish quarterly reports on the
property. The researcher has also gathered additional data from academic journals,
peer-reviewed articles, and other authoritative publications like government manuals,
books, and other authentic materials. The pieces of information are referred to in this
study for they strongly support the claims of the researcher regarding the housing and
property industry in the developing nations.
After the collection of data, the researcher has implemented diagnostic tests for
generating numeric outcomes. The researcher employs quantitative analysis of data
because results obtained from the quantitative analysis is less biased, less manipulated
and more accurate compared to qualitative analysis of data. The researcher has used
Durbin Watson statistics for generating autocorrelation of the variables and multi-
collinearity with the use of the variance inflation factors. The researcher has also
implemented additional tools like kurtosis and skewness for the depiction of normality.
The researcher has also used MS Excel for obtaining the outcome because data
generation on Excel is less time consuming and less complicated compared to other
statistical tools.
The next step is entailing an examination of the generated outcomes and then
implementing informed deductions and inferences on the improvement of the property
sector in the developing nations. Descriptive statistics and infernal statistics are
employed to avail the process of data analysis with the use of STATA program and
other statistical tools of analysis. The obtained results that have been derived from the
data are numeric and the accuracy is high since most information is gathered from
authentic government sources. The results also support the opinion of the author
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regarding the real estate development in developing countries where the scopes are
considerably lesser than that of the developed countries.
1.5 Structure and contents
The current research is structured in accordance to the proposal and is sub structured
into five extensive chapters that include an introduction, a background, methodology,
analysis of data and conclusion/recommendation. The introductory chapter provides a
general overview of the subject and establishes the problem statement. It also provides
a general idea regarding how the research would be executed. The second chapter
provides a constructive background of the study by providing a contextual discussion of
the matter. This chapter also a comprehensive review of the literature in which the
contextual and relevant academic literature are explored. The methodology chapter
provides a detailed description of the methodologies that are employed by the
researcher for the implementation of this research work. It also states the research
questions, aims, and objectives. The methodology chapter discusses the particular
approach to the review of the literature and the reasons for adopting it. The fourth
chapter demonstrates the outcomes of the data analysis which the researcher has
obtained with the use of statistical tools. The process of data collection is explained in
this structure. The results are linked with the objectives of the study. The last chapter
provides an overall summary and commentary on the findings and also reveals the
scopes for future studies.
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Chapter 2: The Background
2.1 A contextual discussion
2.1.1 Background
The real-estate in most of the developing countries implicit a major significance with
economic liberalization. Therefore, it resulted in an augment in labour immigration as
well as business opportunities, leading to an enhanced demand for housing and
commercial space. As opined by Cecchetti and Kharroubi (2015), it could be said that
the construction and housing sectors are contributing significantly to the overall growth
of the core infrastructure in most of the developing nations. The magnification of the real
estate industry might be linked to the progress in various industries including retail,
leisure and hospitality industry, information technology as well as fiscal services.
The real estate companies in some of the developing nations are generally governed by
multiple small players with a moderate or low level of monetary resources and
proficiency. Previously, the real estate sectors in the developing countries customarily
spouted individuals with high value and even financing was supplied unofficially instead
of promoting from institutional assets (Glaeser et al., 2017). Therefore, as a
consequence, it has led to a low intelligibility level. These circumstances in the real-
property sectors of the developing nations transformed with the development of the
industry. However, lately the dynamics of the real estate industries replicate the
prospect of the clients with superior quality and this is aligned with the rising
amalgamation of the global economy of most of the developing countries.
It has been revealed that following the slackening of the finance system in some of the
developing nationss, the industry of real property has been recovering and therefore it is
likely to make an impressive growth within the next decade. According to Rapoport
(2014), the escalation of the concerned industry might be accredited to the enhanced
power of procurement, constructive analytics, continuation of banks which are customer
affable, professionalism, companies of housing sponsorship and the flattering
restructuring by most of the government of the developing countries for attracting the
global investors.
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While real estate industries in the developing nations are not always associated with
growth and success, it has been subjected to the downfall as well (Glaeser et al., 2017).
The expansion and the improvement of the industries of real estate are generally
confined by multiple factors despite its massive potential to add to the economic growth
of these countries. It has been noticed that in most of the developing countries the
residential sectors are largely affected by dreadful pressure. The drop in sales in some
of the developing countries has slowed the process of new residential units entering the
market. As opined by Leung and Tang (2015), this has also resulted in the descending
of new projects as well. There are several other noticeable factors that largely
contributed to the setback of the real estate industries in some of the developing
nations. The loan interests of most of the houses in these developing nations are
exceptionally high and this is probably an integral reason behind this setback. As opined
by Cecchetti and Kharroubi (2015), most of the developers fail to provide the companies
with timely possession of the housing projects. The approval and the agreement
process are not only lengthy, but the processes also meet with multiple obstacles.
The supply line of the real estate industries is largely throttled and the funding lack
appropriate organization as well and these are some of the major looming factors
behind the setback. There has been deflation in the currency of some of the developing
countries and pieces of evidence of political impasses has been noticed as well.
According to Rapoport (2014), due to the extreme competition in some of the prime
cities in the developing nations, the quality of construction activities are largely affected.
Urban sprawl or the migration of people to the urban areas from the rural areas is
practised extensively in the developing nations and due to this, the housing demand has
enhanced rapidly, however, supply in these countries is restricted and inadequate to
meet the demands. As opined by Leung and Tang (2015), a number of players in the
real estate industries have been subjected to illegal practices regarding the promotional
activities of their projects. There are a number of developing nations which lack
regulatory bill as well as policies of national real estates.
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2.1.2 In-depth discussion of the research problem
The main aspect of the research problem covers how the developing nations are
required to focus on the development of the housing industries, the majority of the
countries depend on the real sectors after the agricultural sectors (Saita et al., 2016).
Since real estate industries drive most of the employment, this sector is required to be
improved in a number of areas to expand its scopes. A variety of activities in the real
estate industries fall under the category of unorganized sector in most of the developing
nations. The main reasons behind this issue are that most of the investment in these
sectors are generally made by the multiple small as well as local contractors and
developers and therefore, a high level of proficiency cannot be expected by them
(Tomaskovic-Devey et al., 2015). Compared to the real estate industries in the
developed nations as well as in the organized sectors, the deployment of corporate
practices, as well as qualified professionals, has not been up to the mark in the real
estate sectors of the developing nations. These are some of the areas which have been
covered in the research problem. The developing nations are required to fund a
solution to these issues considering their dependence on this sector. However, over the
years there has been an impressive improvement in the real property sector (Saita et al.
2016).
The research problem has covered another area which focuses on the corruptive
activities associated with the real estate industries. Most of the developing nation is
accounted for corruption practices in the real estate industries and it is due to this, a
large number of contractors have abandoned several housing projects (Juma, 2014).
Several Legal issues involving the collapse of buildings have led to the abandonment of
the housing projects, thus, affecting the development of the nation as a whole.
Therefore, developing nations are unable to generate as much employment in the
corporate sectors compared to what has been made in the developed nation. The
corporate sectors of the developing countries are affected due to the issues related to
real estate development. Corruptive practices in the real estate industries must be
controlled by the government of the developing nations to ensure a steady swelling of
the national economy (Maestas et al., 2016). However, with a change in the trend, real
estate sector has made some remarkable improvement in the developing nation.
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Therefore, it can be expected that there would be a significant improvement in the real
estate industry over the next decade considering the significant improvement which has
been made over the years in this sector.
There are several reasons due to which the improvement and the development in real
estate are required. First, it needs to be reminded that due to the development of real
estate industries, more urbanization can be expected from the developing nations
(Maestas et al., 2016). The growth in this sector would ultimately lead to an
enhancement of the scope of employment; similarly, if the real estate is not improved
and managed well, the scope of employment would be limited leading to slow growth in
the economy. A more professional approach is expected from the real estate sectors in
the developing countries as it would result in meeting the needs of the multinational
corporations which operate in the environment of the developing countries (Juma,
2014). The real estate sectors must be able to evolve and transform into organized
sectors. Some of the drivers which are required for the transformation include
accelerating the growth in the BPO sectors, and therefore the MNCs would be able to
enter with stringent and specific requirements of real estate. This would lead to enhance
the conglomerates of the “local-global” as some of the local organizations in the
developing nation would be able to achieve a global scale riding on a large amount of
domestic demand. As opined by Martynova (2015), this way the manufacturing would
off-shore leading to more additional space as well as some requirements of the
infrastructure including the establishment of modern warehouses? Professional and
large business houses would be able to enter the development of real estate along with
some private equity funds.
2.1.3 Relevance of the discussion
The discussion in the problem is relevant to that extent where the real estate developer
would be able to identify the issues and locate appropriate measures to resolve them.
The developing nation would be able to identify the significance of growth and how it
would make some considerable contributions which would benefit the country as a
whole. The discussion would enable the real estate industries in the developing
countries to comprehend to what level they have improved over the years and what
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more could be done to escalate the growth in the coming years. As opined by
Martynova (2015), the discussion is relevant as it would allow them to identify their
position at the present.
This discussion would allow them to understand all the factors that would lead to their
growth and some of the factors are include retaining and attracting talent. It can be
understood that exponentially grow in some of the developing countries is responsible
for a dearth of experienced and qualified professionals of the real estate sectors.
Countries like China and India come across the brunt of what is known as the talent war
in the mid as well as the senior level position of management (Wu et al., 2015). This
discussion is relevant as it allows them to understand the governance process which is
ideal for the growth and improvement of the property sectors. Most of the developing
markets in some of these nations have limited access to information which occurs in the
public domain. Therefore, most of the CRE professionals have accepted that it is
challenging to combine the requirements of the governance with the pragmatic solutions
of delivery. Therefore some of the challenges faced by the professionals generally
range from ensuring the need for proper occupation documentation to dealing with a
diverse legal opinion on liaising and title with the authorities of local statutory as well as
some governing bodies (Lieser & Groh, 2014). Therefore, they are required to deal with
the complex structure of tax and the involvement of the farmers and labours in the
dialogue of land deals and infrastructure.
This discussion is relevant as it would inform them of the necessity for speeding up the
project delivery. It has been noticed that the cycle time for the delivery of the project is
generally unpredictable. Most of the projects in the developing nations take around
three to five years to complete the process of delivery. According to Sbia et al. (2014),
this is considered as a major risk as it results in market failures for the constant
modification in the market policies and litigation. Clear planning, responsibilities, roles,
monitoring, and communication are linked with the relationship management with the
external as well as the internal stakeholders and these are considered as the deciding
factors between failures and success in the market. Therefore, in the developing
countries, it is considered better for large projects as well as transactions to involve in
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early engagement and this would allow them to manage time in a more effective
manner and therefore, the process of due diligence would be greatly benefitted from this
(Herndon et al., 2014). The discussion would make the real estate industries more
informative and so far it has been noticed that the real estate industries in the
developing nations are making rapid improvement. It is mainly due to the involvement of
more professionals in the sector, this has therefore created a huge opportunity for the
businesses and organizations in the developing nations (Korsakienė & Tvaronavičienė,
2014).
The discussion is relevant as it has allowed a number of real estate sectors to identify
the benefits of working in a more professional manner. It has created wider scope for
the corporate sectors in the developing nations and created a global opportunity for their
business as well. The growth in the corporate sector would ultimately contribute to the
economy of these developing nations. A large number of people in these countries have
found an even wider scope of employment. The contribution of the housing industry is
considered as the most important aspect of development (Herndon et al., 2014).
2.2 Literature review
2.2.1 Factors influencing the development of real estate
The industry of real estate has experienced a consistent advancement and evolution in
the developing nations. The headway of rustic areas towards urbanization in the
developing nations is the apparent driver that led to the growth of both residential and
corporate properties (Nguyen et al., 2017). However, the increased demand for property
distorts the balance between supply and demand which brewed argument regarding the
unorganized and contentious development of housing sectors. The distressful scenario
of the housing industry in developing countries is escalated by wastefulness. As a result
of this scenario, the supply chain of the sector experiences difficulties like the absence
of credit capital, the absence of a structured financial mechanism, inflexible interest
fees, and loans, widespread issues of unemployment and low earnings. Those are not
the only factors that affect and deteriorate the growth and development of the real
estate sectors in developing countries. According to Rajakallio et al. (2018), land
acquisition issues, over-population and the increased price of raw materials and building
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resources have equally affected the enhancement of the housing industry in the
developing countries.
The development in the housing industry could be estimated with the use of various
tools and methodologies. One such estimation tools for measuring the performance of
this sector are the records of trade stock values. These records and reports are
benchmarked based on the execution of fixed intrigue stock and estimating offers.
Matemilola et al. (2019) opined that this tool is applicable in the property market the
extension of which is highly constrained when contrasted against commercial
transactions due to limited access to data and information. Property valuation is
evaluated for assessing its development in the developing countries and specific
methodologies are applicable in the valuation based on the subjective attributes. In the
classification of property, the impact of financial investors, capital performance and the
overall performance of the sector are evaluated independently and individually so that
key indicators of performance could be identified and the development could be
assessed (Jain, 2015).
The trend in real estate investment enhanced and the interest has shifted towards
corporate growth. Large and small investors of the developing communities have
recognized the significance of the corporate sector. As a result of this, real estate within
the discipline of the corporate sector has grown vigorously. According to Sternik and
Sternik (2017), it meets the ever-increasing requirement of business process
outsourcing and multinational sectors for enabling the developing countries to retain its
performance in a competitive environment. The vigorous development of the local
conglomerates has also contributed to real estate evolution. The housing sectors are
benefitted from the local businesses that have acquired global scales. The corporate
sectors are riding on manufacturing off-shoring and increased domestic demand (Kaya
& Gazioğlu, 2015). These factors have resulted in infrastructural requirements and
space for advanced warehouses thereby ensuring the growth and demand for real
estate.
Large businesses are entering into the market has resulted in the flow of equity funds
into the growth and development of the property market. This has also increased
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investment in real estate to cater for the intrinsic requirement for sustainability. Kociuba
and Matacz (2018) state that investment liquidity, flexible business practices and the
involvement of professionals have also marked the growth of the housing sector in
developing countries. Besides corporate requirements, real estate properties also serve
the underlying needs of the hospitality industry. Some of the major sectors of the
developing countries like the corporate sector or the tourism sector highly relies on the
property market for their own growth and development and therefore these sectors have
also contributed to the enhancement of real estate in the developing nations (Busch et
al., 2016). Furthermore, these sectors cannot exist without relying on the housing
sector.
A key indicator that marks the performance of the property market is the rapid
development of the IPCs in the developing countries. The IPCs are the ‘International
Property Consultants’ that invest in developing countries mostly because of the financial
benefits and flexible government policies. The phenomenal growth of the IPCs has been
reported recently thus resulting in employee deployment in facility management,
transaction management, portfolio planning and project management (Setiawan et al.,
2018). Some leading corporations have occupied a significant share of the real estate
industry. These corporations have employed their personal property professionals who
are either outsourced or in-sourced for adding prominent value to the services they
provide in the property and housing industry. However, the engagement of these
organization with the estate industry might vary depending on the kind of business they
are involved in. These are some of the major aspects influencing the improvement and
development of the real property industry in developing countries. The variances and
modifications of these factors also mark the rise and fall of the property market
(Choruengwiwat et al., 2019). However, there are a number of factors that have
disturbed the balance of the real property industry.
The housing industry has failed to meet the requirement of the population as the
demand for urbanization continues to grow. The developed counties have maintained a
balance in population growth and most of the areas are urbanized. In contrast, most
developing countries experience the problem of overpopulation. According to Łaszek et
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al. (2017), people from rural areas move into the cities for jobs and later they settle with
families. However, the real estate industry has failed to meet their requirement
sufficiently which led to the growth of slums and smaller communities. Since the
demand is high the price of property increases and reaches beyond the capacity of the
ordinary people. The mortgage is high as a result of this in most developing countries.
The government is trying to plan effective measures for controlling the critical housing
scenario while at the same time failing to mitigate the associative issues. This problem
has become a concern in most developing countries which has influenced the
improvement of real estate in a good and a bad way (Kaya & Gazioğlu, 2015). These
are some of the major factors and issues that have influenced the growth and the
development of real estate thus marking the rise and the fall of the industry in the
developing countries.
2.2.2 Contribution to economic development
The economic growth of a nation is generally characterized by the expansion in the total
yield of a nation's economy. This can be estimated with the use of GDP, and this is
linked to the irrevocability point of personal satisfaction as well as improving standard
among the individuals. This generally occurs when the yield per capita is more than the
population of the nation (Korsakienė & Tvaronavičienė, 2014). Economic growth is often
characterized by a procedure of growing the economic size of a country and this is
considered as a monetary marker of larger-scale especially the "gross domestic product
per capita", this results in a constructive outcome in the area of the social financial.
Economic growth is often defined as the growth which results in the economy of the
nation. The development which occurs in a given economy might be estimated with the
use of GDP, which showcases the summing estimation of the enterprises as well as the
definite products (Bezemer et al., 2016). This has enabled them to trade and made cash
within a specific timeframe. Consequently, it can be said that the rate at which the
economy of a nation grows is generally characterized by the change rate in the number
of products which have been created. The administration commences with one year and
then it proceeds to the next, this includes the real estate development and an improved
standard of living as well. It has also enhanced the employment level in a number of
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developing nations. These are some of the basic contributions of the real estate sectors
to the economy of a number of developing nations (Pan & Mishra, 2018). A healthy
performance has been noticed in the economy of most of the nations and if it continues
this way, there would be a remarkable hike in the near future.
In recent years, the economy of the developing nations has intensified. In the year
2000, some of the regions of the developing countries accounted for not even 30% of
the total world's output. However, by the year 2014, the share has made a remarkable
enhancement of 40%. Asia is accounted for almost 60% of the total population of the
world. In terms of the annual growth, the contribution made so far is impressive (Pereira
& Moreira, 2014). For the real estates of residential, the basic logic that works is the co-
integration of the capital return from the real estate and the GDP growth arises mainly
due to the income accumulated from purchasing a home. For real estate for commercial
purposes, a similar logic can be applied as well. However, the investors of commercial
real estate behave differently from the homebuyers (Pereira & Moreira, 2014).
Therefore it has been noted that commercial properties is a different idea from the
residential real estate even though the same logic is applicable to both. The investors of
the commercial real estate evaluate the investment properties, considering the expected
income and due to this, there is a different experience when it comes to the price of the
commercial properties (Hartmann, 2015).
Generally, it is believed that the price of the investment property work as a function of
what is known as the current income or CAP rate, opportunity cost, expected income
and the expectancy of the growth of capital value. However, it can be said that all these
are affected highly by the GDP, albeit with slight differences because the development
in the economy demands commercial spaces too. Therefore, the relationship between
economic development and the property market can be measured with this
understanding (Burdekin & Tao, 2014). It can be estimated that the development and
the enhancement of real estate would positively impact the growth of the economy in
the developing nation. Therefore, it is no surprise why the developing nation is trying to
put in extra effort in the development of the sectors.
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This review of literature mainly focuses on the dynamic relevance between the growth in
the economy and real estate investments. A positive effect is therefore found in the
investment to real property on economic growth. The relationship has been found to be
much stronger in the short-term, while in the long run the relationship is associated with
negativity (Hartmann, 2015). Therefore, on the one hand, the relationship is positive,
while on the other it is negative. The investment which is specially made on housing is
generally considered as a significant factor for short-term fluctuations in the economy
and therefore, it results in a number of downside risks particularly in the long run. The
study also focuses on the effect which the investment of residential and commercial
property has on the development of the regional economy, and it is generally associated
with periodic characteristics and in the eastern region, it is stronger than those of the
regions in the mid-west. The impact of negative endurance has strengthened
significantly following the year 2004 (Pereira & Moreira, 2014). The expenditure of the
government in most of the developing nation has hindered the growth of the economy,
cutting the expenditures of the government and the extravagance wind is curbed by the
new leadership definition in some of the developing nations like China has been proved
to be more effective. Therefore, the key areas which are mainly focused on the literature
review include property investment, it has been compared with the investment on the
non-real estate, the economic stability and growth, generalized methods, and the data
on dynamic panel (Burdekin & Tao, 2014). These are some of the main areas covered
in the paper.
Therefore, it could be marked from the discussion that real sectors are significantly
important for the growth of the developing nation. It is estimated that the housing sector
would be involved in shaping up the developing countries to developed countries. It has
also been estimated that due to the real property sector, individual purposes would be
served as well. Employment would enhance on one hand, while on the other the nations
would be urbanized (Aizenman & Jinjarak, 2014). The funds of real estate would exceed
the commercial funds soon. However, there are still some areas which are needed to be
improved in the developing nations.
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2.2.3 Current status and future scopes
The picture of the land scene largely differed two decades ago and the global
megatrends would modify the industry of real property in the following years. The
propensity of the current patterns as of now would determine how far the land scene
would change in the future. It has been estimated that by the year 2020 urban
communities would make extraordinary progress and some of the rural areas would be
transformed. With the advent of advanced technology, the demand for urbanization
would increase (Małkowska & Głuszak, 2016). Urbanization would especially push its
way into the rural locations of Latin America, the Middle East, Asia and some parts of
Africa. It is also estimated that some of the underprivileged areas of the Western
countries would undergo urbanization shortly. However, not all of the new urbanized
areas in the developing countries would prosper. While some of the urban communities
in the developing countries would turn out be organized cities focused on a well
economic structure while the others would completely fall flat in the competitive
environment. According to Kurlat and Stroebel (2015), the housing market is the
potential of taking over the agricultural sectors in most developing nations of Asia and
Africa.
The complimentary publication of the government websites and the private websites
regarding the trends of the property markets inform that the growth of GDP would
influence the development of the property market. The returns of bonds and equity were
supported by an exceptional business and economic condition over the past decades
and were substantially higher. The growth was stable in most of the developing
countries of the world and over the past few years, the high returns in Western countries
stemmed from the high growth of GDP, unusual rates of interest and inflation decline
(Caporin et al., 2019). Positive demography in the Western region influenced the GDP
growth which in turn enhanced the development of the market. On the other hand, the
investment environment of the developing countries supported the real estate market
which was soon treated as an effective asset class. Some investors could cope with the
increasing liquidity and the local market of real estate offers a desired characteristic of
investment. In contrast, Crosby et al. (2018) stated that long-term income and
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diversification benefits a steady growth of capital appreciation supported the vigorous
growth of the property market.
Over recent years, sustainable and long-term economic stability and enhancement in
the Asian and African countries has been persistent. In the Asian countries especially
the GDP growth has acted as a key driver for the increased rents and prices of
properties and investment in real estate participated in stable economic development. A
reality check regarding the property market is supposed to indicate whether the
economic growth in Asian countries is likely to develop further over the next decade
(Deng et al., 2018). A link between real estate and GDP along with the price and rents
of properties is likely to indicate is the property market could capture the stable
improvement in the economies of some of the developing countries.
The global development of the property market with the tremendous growth of the
world’s stock of the real estate institutional grade. The yield of the worldwide market
relies on growth by US$ 15trillion by the year 2025. In 2012 the yield was around US$
8.7 trillion (Barclay et al., 2017). The emerging property sectors in the Asian countries is
expected to be the quickest to develop in the future while the sub-Saharan parts of
Africa would continue to exhibit an astounding upshot. However, there is a lot of effort,
capital, and technology to be invested to prove the estimation right. A few areas that
have recently urbanized would turn out be incredible financial developers, generators,
and centres of incentives. The other urbanized areas of the developing countries would
wreck in the long-run into the ghettos, wild wrongdoings and the poor framework of the
country. In some of the developing nations, the congested town areas would compel
individuals to settle in satellite communities and rustic locations. However, Kopczuk and
Munroe (2015) stated that the impact of urbanization or GDP or investors would
continue to influence the development of real estates in the developing nations in some
ways. While some would be benefitted from the potential impacts, the others would
suffer as a result of it in an unorganized scenario.
The countries like India and China has been experiencing rapid urbanization and would
continue to be influenced by it. The condition of the property market has swelled in both
these highly populated countries. The urban areas of these countries and the countries
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in the Middle East would co-effectively utilize the natural impacts of urbanization. The
large scale investors and the governments are putting adequate effort into fostering the
rapid construction of urban development (Robinson and McAllister, 2015). Some of the
very new communities that have undergone urbanization include South Korea’s Sejong
City, Abu Dhabi’s Masdar City and India’s Jaypee Sports City.
China is the most populated countries of the world and is estimated to experience the
biggest movement of urban development that would support the growth of the property
market. The new urban cities of China would look for the presence of a prosperous
middle class. Naturally, the price of the property would rise as a result of the growing
demands in the new cities. The Middle East, Africa and Latin America would experience
a similar scenario as people from the rural zones would move into the newly developed
cities for a better quality of living. It is anticipated that the working class would show a
stark development until 2040 in most of the developing countries in Asia (Newell, 2016).
Most of the developing countries are afflicted with a poor structure of economy for
supporting the consequential improvement of the real estate industry. Most of the
developing countries eventually opt out of attractive monetary funds and rely on risky
Chinese loans. Ghana was a major contributor to the development of Africa but the
country is lately subject to government deficit, swelling inflation, and a weak economic
structure and this has caused the increased intervention of unprofessional investors in
the market (Grybauskas and Pilinkienė, 2018).
2.2.4 Techniques and methods for improvement
There are certain regulations and legal policies that have been framed for the worldwide
improvement of the housing industry. The enhancement of the condition of the real
estate includes the enhancement of lands, modification, and renovation of existing
infrastructure and property development. These renovation projects are more than just
repairing, replacing and restoring the existing structures. The methods of improvement
are proposed for meeting the ever-increasing demand of the public for land. According
to Cashman et al. (2016), the flow of people into the urban areas in the heavily
populated countries led to an unorganized land system which eventually is responsible
for the introduction of the property improvement policies. The improvement of the
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immovable properties of real estate are marked with permanence and it looks forward to
adding utility and value to the properties in the developing countries.
The FHA (Federal Housing Administration) avails specific benefits to consumers for
obtaining affordable loans for the improvement of homes. The home improvement loans
are insured by private lenders for improving properties that serve special requirements.
Some of the programs of the FHA allow loans that could support moderate and light
rehabilitation of personal and corporate properties and the construction projects of all
kind of non-residential buildings (Black et al., 2017). Thus the properties that serve the
interest of corporate sectors or the hospitality industry are benefitted from the
improvement policies of the FHA. The policies of the FHA are flexible and conform to
the global environmental laws. The international communities have also taken effective
measures for improving the land scene in the developing countries for most of these
countries lack a structured economy. The intervention of these communities and legal
bodies guided the development projects of the developing countries. After the war,
several local and national communities emerged for redeveloping the infrastructure. The
developing countries like China or India were largely benefitted from such communities
(Cecchetti & Kharroubi, 2015). These national communities were later responsible for
undertaking remarkable redevelopment projects thus changing the distorted scene of
the war-torn infrastructure.
Some specific ways are applicable in the improvement of real properties in the
developing countries. One of the factors that are largely responsible for the inorganized
condition of the property market in developing countries is corruption. Failing to mitigate
real estate frauds could lead to a market decline. Frauds in the property market could
exist in several forms and could collapse the entire national market of this industry.
Some of the very common examples of corruption in this industry include fraud of home
equity, foreclosure bailout, rental fraud, renovation scams and scams related to
deceptive timeshare (Glaeser et al. 2017). Schemes related to foreclosure promises to
protect properties in foreclosure until it is handed back to the real owners. However, the
con artist might not be adequately furnished for paying mortgages and the actual victim
eventually winds up in the bailout process. Another similar property improvement
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scheme involves the refinancing loan and the creditors know very well that the owners
of the property would not be able to repay it.
Frauds in home equity schemes involve the small and door-to-door contractors who are
not only convincing but also make financial arrangements of their own works through a
home loan. In most cases, no improvement there would be no improvement which
would eventually lead to incomplete activities (Rapoport, 2014). In other cases, the
improvement works are below quality and substandard failing to attract customers. The
homeowners are at risk of foreclosure as a result of huge debts. Sometimes the con
artist might put up a property for rental purposes but is not the actual owner of the
property. The con artists usually utilize abandoned buildings and soon disappear after
the collection of security money. As opined by Leung et al. 2015, these corruptions
hinder the improvement of the real properties and the market as a whole. The
government is required to take consequential steps to control the growth of fraud
events.
Some policies are introduced which could improve the scenario of real estate
management. Property flipping ensures that the buyer does not sell the property at a
substantially higher rate than the original price by providing false statements regarding
the property. Settlement statements in two steps could improve the unorganized system
of real property. Under this scheme, a statement of settlement is provided so that the
seller knows the accurate and the actual selling price (Saita et al. 2016). A statement of
fraudulent is also prepared that indicates at the inflated rate of selling price for obtaining
loans. Fraudulent qualifications is a punishable crime in which the employment history is
falsified or the credit records are altered in order to obtain loans. These steps have
been taken by the government of most developing nations for improving the condition of
real properties and adding value to it. Some remedies for improvement include IRS
penalties, criminal prosecution and punitive damages among the other recoveries
(Juma, 2014).
The condition of real estate has improved over the years in the developing nations
however the fraudulent activities continue to exist as a result of the limited public
awareness. The people in these countries are not educated regarding the property
26

market as much as they are about the other industries. They only show interest in real
estate when they intend to buy or sell one. As a result of this, they do not possess
adequate knowledge regarding the appropriate procedures that are involved in the
trading of real properties (Maestas et al. 2016). The contractors and creditors take
advantages of the lack of knowledge. The government, local communities and the real
estate dealers must establish awareness campaigns for developing the perception of
the public regarding what they should and should not while buying or selling a property.
Awareness campaigns could improve the corrupted scene and redevelop the affected
market. Its time that the government put effort into the development of real estate which
is a leading contributor to economic development after the agricultural sectors. The
recognition of the public and the recognition of the government regarding the need for
improvement could bring remarkable changes in the industry with a focus on urban
development (Martynova, 2015). The real estate market is a potential sector that could
promise effective growth.
2.2.5 Applicable theories
The improvement and the recovery of the real estate market in the developing countries
could be explained concerning some specific theoretical models. The application of
theories is relevant from the standpoint that it supports the claims and opinions of the
author. The suggestions of the author could be justified with the application of growth
theories (Lieser and Groh, 2014). In fact, the growth theories applied to the property
market could determine the factors that could upgrade the condition of the real
properties in the developing countries. While the descriptive details help in the
understanding of the concept, the theoretical analysis furnishes the study with a more
scientific approach.
In the world of business, the Unicist Theory is often applicable for understanding
microeconomic and macroeconomic growth (Sbia et al., 2014). The theory was first
applied in research works that were directed at the business fundamentals or catalysts
driving growth and development at a micro and macro level. Both the growth factors are
integrated into a unified structure that supports the current scenarios of development
and also helps in the formation of constructive strategies that could promise the market
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development. The Unicist Theory establishes a set of pre-conditions that are usually
regarded and also justifies the actions that are required to be taken for promoting sector
improvement. This theory also indicates the probable limits of the particular sectors that
brew from the available resources, cultural archetypes and also institutional archetypes.
The approach of this theory occurred from Conceptual Economics, Conceptual
Anthropology and Conceptual management (Herndon et al., 2014). The Unicist Theory
is highly applicable in the sector in explaining the fundamentals that are directly
responsible for the development of the industry. From an overview of a general
understanding, it could be concluded that the vital aspects that act as key drivers in
determining the growth of this sector are urbanization. Urbanization increased the
demand for housing especially in the developing countries that were previously
dominated by rural areas and now experiencing an urban evolution. Another reason
responsible for the growth from a microeconomic perspective is the development of the
corporate sectors and business processes. From a macroeconomic perspective, the
growth in GDP, flexible tax policies and inflation largely influenced the quality of the real
estate industry. Other micro and macroeconomic factors like maintenance, legal suits,
economic growth, and the associated industries are largely responsible for the
development of this sector. Therefore, this theory helps in understanding the economic
aspects that influence the balance and status of the property market.
Another theory of growth that could explain the scope of this industry is the McKinsey
Growth pyramid (Korsakienė & Tvaronavičienė, 2014). The Growth Pyramid of
McKinsey is based on business strategies and is often compared to the models of the
Ansoff Matrix and Product Matrix. Though this theory is highly specified towards product
development it could also be applied to the penetration strategies of real properties. The
Growth Pyramid comprises of four strategies of growth that include development,
penetration, and diversification and market growth. These four strategies lead to the
development of strategic planning. The theorist believes that business growth could be
accomplished by acquisition, marketing stakes, joint ventures, strategic alliances,
investments, and marketing partnership. However, these strategies could increase the
risk factors and the business must venture into the property market knowing the
potential risks. However, these strategies could enhance the core competencies or the
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operational skills, make use of privileged assets, enhance growth opportunities and
develop an interpersonal relationship with associated marketers. This theory is highly
applicable in the property market which is also undergoing through a process of
penetration in a completely new way (Bezemer et al., 2016). The Growth Pyramid is
highly focused on providing benefits to existing customers. This means the
redevelopment projects for the improvement of infrastructure need to have flexible
policies. New customers using existing properties must be safe and the government
must take precautions for protecting the residents from hazards. The next step is to
meet the growing demand for urbanization and balancing it with employability and
decency. The property market could utilize new channels like digital marketing and B2B
for reaching a wider range of customers in developing countries. Looking for new
geographies and industry structure could contribute to market growth and profitability of
this sector. New areas of competition act as a driver for the development of this sector
in a competitive and emerging market.
The next theory is the most acclaimed theory that confirms market conditions and the
scopes for development. The Economy Theory is designed according to the law of
supply and demand (Pan & Mishra, 2018). The Economy Theory is the cardinal
principle that governs the concept of the economy as a whole. It describes a state of
business in which the increase in supply is marked with a drop in value or price and an
increase in demand would result in the increase in price and value. This is, in fact, a
basic principle that economists intuitively comprehend regarding the interrelationship
between goods and the demand for it in the market. When the demand and supply of
goods or services are balanced, the economy of the country reaches equilibrium
between the quantity of the product and the price of the product. This theory is highly
applicable to the real estate industry (Pereira & Moreira, 2014). From a pre-historical
time, the shelter has been an indispensable human requirement without which other
beings could survive. However, human needs protection from the external world and
this emerges the concept of home. In the rural lifestyle brick and mortar shelter did not
pave its way into the underprivileged areas of the developing countries. Urbanization
implied at a better and quality lifestyle that enticed the people living in the areas of
limited advantages. In the urban locations the quality of lifestyle was provoking and so
29

was the scope for employment. However, most developing countries are dominated by
rural locations. People began to move into the cities and urbanization pushed its way
into the rural zones. Consequently due to the increasing demand for real properties,
both residential and corporate, increased and so did the price of land, price of houses,
rents, and mortgages (Hartmann, 2015). This situation justifies the application of the
Economy Theory in the industry of real estate.
2.2.6 Benefits and challenges of real estate investment in developing nations
A large number of local investors and first-time investors invest in properties that are
owner-occupied. Besides, developing real properties or buying them for the use of
developers and buyers, small investors or local investors generally procure real
properties because of the followings.
1. Steady income- Most of the investors in the developing nations invest in housing
properties due to the steady cash flow which could be earned by the investors as capital
appreciation or rental income. In the year 2017, more than 80% of investors who bought
overseas properties specifically did so for acquiring a second stream of income
(Burdekin & Tao, 2014). Almost 12% of buyers invested in real properties for using them
as holiday homes and around 8% of people did so for acquiring capital appreciation.
The source might seem passive but if invested in a convenient location, the investor
could earn significantly for adjusting the expenses and also make some money apart
from the main source of income.
2. Financial security- Investment in real properties could be collateral for the capital
and loans for some kind of business. But why real estate? Investment in real properties
is especially beneficial because it provides investors with a long-term and stable
financial security (Aizenman & Jinjarak, 2014). The investors are availed with
successive cash flow for several years.
3. Tax benefits- Real estate investment is considerably tax-efficient which grabs the
interest of first-time investors. Real estate investment is especially beneficial because of
the tax exemptions that investors are availed with for the possession of rental housing
property. Tax benefit or exemptions is one of the many reasons due to which people
choose to invest in real properties (Tomaskovic-Devey et al., 2015). Rental income
30

acquired from house rent is exempted from self-employment tax. Investors are also
benefitted with tax-breaks insurance, property depreciation, maintenance, legal fees,
renovation, and property taxes.
4. Coverage of mortgage payment- Tenants are included in the benefits that investors
receive from real estate investment. The income the investors are receiving from the
tenants as house rent each month is enough for covering the mortgage payments that
the investor would have to pay after a specific time period. This is the most effective
way of making up the money required for mortgage payments and is widely practised in
many of the developing countries where property mortgage is typical (Squires et al.,
2016). Essentially, the tenants here are actually paying the mortgage of the owner.
5. Appreciation over time- Investment in real property is not a short-term planning and
the first-time investors are required to understand it. Most investors in the developing
countries invest in gold and properties for the same reasons that these assets promise
appreciation over time. This is also the same reason why real estate investment is long-
term planning. Many might back away from the time-consuming process but on the
contrary, the waiting would be fruitful in some years when the investors receive high
returns. Till then, most investors utilize the existing property for rental purposes for
covering the general expenses (Kauškale & Geipele, 2017).
The benefits that real estate investment provide are many and this could entice first-
time investors in the developing countries. However, investors, especially those who are
new to this must be aware of the following challenges.
1. Time- Timing is a serious driver in property deals because of the time-consuming
period of gestation. The Nigerian market sentiments in the 21st century are rather dull
and this would continue for another couple of years. The actual outcome of property
investment could only be determined from time and the investor might have to wait for
years before acquiring a desirable valuation of the property.
2. First deal success- Investors might find it an uncomfortable scenario and
successfully pulling the trigger could be challenging on the very first deal (Glaeser et al.,
2017). In the hot business environment of the developing countries that involve several
31

smart groups of investors with incredible track records, one might find it challenging to
venture into the first deal. The first investment in the property market might discourage
the inexperienced investors and there is the risk of failing. The first-time investors are
required to invest adequately in the market knowing and accepting the potential risks
associated with it. Remaining prudent is the necessary option.
3. Risks- Investment in property is a risky venture and could be a complex deal
especially for the new investors. Dealing with the agencies of government for
purchasing houses or land involves fewer risks than purchasing from mushroom
companies and individuals. In Nigeria and some of the sub-Saharan parts of Africa, only
3% of the available properties are titled properties and the acquisition of a titled property
in these countries could seem like a herculean endeavour. The land transaction is the
actual title security to the claimed land. A land that has been titled might get it revoked
with the consent of the governor (Cao & Porter-Nelson, 2016).
4. Opportunity cost and money value- The opportunity cost of share investment might
involve motor vehicles and bonds. The opportunity cost that could tempt an investor to
opt for share investment of government bonds, quoted companies, and vehicles could
discourage investment in real estate. Investors might fail to shift efficiently through deals
that are overpriced. The opportunities offered by the estate industry in the developing
countries are many which eventually makes it a difficult choice between investing in
corporate property and investing in residential property (Nguyen et al., 2017). The
inexperienced investors are skeptical regarding the returns they would acquire after a
time-period.
5. Fraud- As discussed in the earlier sections investment in real estate could be a risky
venture in the developing countries because of the fraudulent activities associated with
it. Fraudulent practices discourage first-time investors because of the incidents of selling
off-plan properties. Political intervention and political frauds could also discourage new
investors. Off-plan properties that have not yet received legal consent are sold and used
before completion and without valid proof of ownership. Off-plan properties at times
could provoke investors because they are sold at a price which is considerably lesser
than the original market value (Oyedele, 2018).
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6. Market transparency issues- The developing countries, unlike the developed
countries lack market transparency regarding real-estate development. The lack of
market information including weather, prices, promotion, stocks and production. The
market participants of real properties are barely aware of these factors. Their lack of
proficiency, experience and knowledge in the specific field could cost them dearly. On
the other hand, the scenario is very different in the developed countries where only
professional builders and investors are engaged in the property market. This is one of
the factors that have contributed to the lack of performance of the developing countries
in the property market. The developed countries exercise due diligence with the
contractors and the investors which is largely lacking in the developing countries. Due to
this factor the existence of fraud transactions is prominent ion the property market. Most
of the properties in the developed countries in America and Europe are titled properties
and therefore they are not subject to external risk. Investing in the developing countries,
on the other hand, is a risky venture because the majority of the real properties are
untitled. The properties that are not registered or titled are subject to high market and
legal risks. This is also one of the aspects that have contributed to the
underperformance of the developing countries in the industry of the property market.
Chapter 3: Methodology
3.1 Introduction
Research is implemented in almost every filed mostly by professionals. Research is not
just a set of skills but rather it is a way in which individuals think. The various aspect of a
study is critically examined by the researcher over the span of a few months or even
years. This enables the researcher to comprehend as well as formulate a number of
guiding principles which are used for governing certain procedures. Therefore, the
researcher is able to develop theories and test them as well and it makes a significant
contribution to his/her profession and also to the advancement of research practice. The
researcher develops a habit of questioning the work and uses a systematic examination
to address the research questions and what has been perceived by them. The
researcher institute some of the most appropriate changes in order to find a more
effective and personal service. Therefore, to evaluate the impact of real estate sectors
33

in the developing nation, the researchers have carried out extensive research work. The
researcher developed a research design as well as a methodology. Therefore, this
chapter will discuss in detail the design, population, data collection and analysis of the
data with the use of relevant tests as well as analytical models.
3.2 Research questions
The research questions relevant to the current study are listed below:
RQ1: What are the contributions of the housing sectors to the economy of the
developing nation?
RQ2: What are some of the risks associated with the property sectors in the developing
countries?
RQ3: What are the roles of the investors in the real estate of the developing nation?
RQ4: What are the impacts of GDP growth on the development of the housing sectors
in the developing countries?
3.3 Research aim and objective
The research aims at evaluating the rise and fall of the real estate sectors in developing
countries. The researcher aims at finding the impact of this rise and fall on the
developing countries. It is also the aim to understand the contribution of the real estate
sectors to the improvement of the country.
The research objectives are the following:
1. To evaluate the contribution of the real estate sectors to the economy of the
developing nations.
2. To understand the risks associated with the housing sectors in the developing
countries.
3. To comprehend the role of the investors in the real property sectors of the developing
countries.
4. To investigate the impact of GDP growth on the development of the real estate
sectors in the developing countries.
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3.4 Research onion
The onion was originally designed by Saunders and the purpose of this structure is to
describe extensively all the stages which a researcher generally come across to
formulate the research work successfully. An effective methodology of research
generally commences with a research philosophy, which is considered as the starting
point of the research work. This process is followed by a research approach and the
third step of Saunders’ onion involves a research strategy (Kothari, 2004). A time frame
is included into the fourth layer of the onion, while in the fifth step, the methodology for
the data collection is included. One of the significances of the research onion lies in the
fact that a series of layers are created and under each layer, several methods of
collecting data can be comprehended by the researcher. It illustrates multiple steps
through which a methodological study could be defined. The layers have divisions and
subdivisions as well and therefore, it provides the researchers with a detailed
description. It enables a researcher to create his own research design as well as
method. Therefore, it can be said that the research onion is advantageous to the
researcher in multiple ways, and supports the understanding of the researcher as well.
3.5 Research Philosophy
Research philosophy can be classified into three major categories and these include
positivism, post-positivism, and realism. The researcher has used post-positivism in for
evaluating the rise and fall of real estate in the developing countries. In philosophy as
well as in the “model of scientific inquiry”, post-positivism is defined as a meta-
theoretical stance which is used for amending and criticizing the concept of positivism.
According to the ideas of the post-positivists theories, values, hypothesis, as well as the
background knowledge of the researcher, might influence the results observed by the
researcher (Vogt, 2007). Therefore, it can be comprehended that the study, “The cause
of the rise and fall of real estate on the developing countries is based on theories and
hypothesis developed by the researchers himself based on the observation and other
techniques and methods. Therefore it could be said that the entire study of “Real estate
sectors in the developing countries” is based on ideas and some basic units. It entirely
35

depends on the “laws of interaction”. “Empirical indicators” have been used by the
researchers for the purpose of developing the topic. Therefore, the theories developed
in real estate sectors in the developing countries would be accessed on the basis of its
accuracy and consistency. It is believed by the researchers that in the case of post-
positivism reality would be known to them, but imperfectly.
3.6 Research approach
The deductive approach is employed by researchers in order to develop a logical
argument and this is generally approached by applying known facts, properties,
definitions, and certain laws related to logic. Therefore, the researchers apply the ‘if-
then’ statement in the deductive approach to the study. For instance, it is believed by
the researchers that if a particular idea is true, then the other ideas must be true as well.
The ‘if’ part of the argument or the statement is known as the hypothesis, while the
‘then’ part is referred to as the conclusion drawn from the hypothesis. Therefore, each
statement developed by the researcher would consist of both the hypothesis as well as
the conclusion. This approach has been applied by the researcher for an understanding
of the rise and fall of the real estate sectors in the developing nations. Therefore, the
researchers develop theories on the real estate sectors in the developing nations and
based on those theories, the researcher develops the hypotheses. Once, the
hypotheses are developed, the researchers proceed to test the hypothesis with the
execution of several techniques and tools as well. The reasoning in the deductive
approach is linked with the premises as well as conclusions. Therefore, researchers
have used this approach in order to draw conclusion from “The rise and fall of real
estate in the developing countries”.
3.7 Research design
Researchers generally use three types of design in their research work and these
include exploratory, explanatory and descriptive. The researcher evaluates the “rise and
fall of real estate in the developing countries” has used the exploratory design. This
approach has been used by the researcher because it is believed by him that this topic
is not well-researched and therefore, a more detailed study is required to cover some of
the areas which have not been explored by the previous researchers. Thus, it is the
36

intention of the researcher to establish priorities and the entire study would be
developed on the basis of prioritization (Walliman, 2017). The researcher also aims at
developing more operational definition on “The rise and fall of real estate in the
developing countries” and it would contribute towards the improvement of the ultimate
research design. Exploratory design is used for this study in order to evaluate the most
appropriate research design, the method of collecting data and finally, the selection of
the particular topic. This design has also been used by the researcher in this study in
order to address a number of significant research questions, the researcher proceed
with the work and try to explore the questions in order to find the solutions.
3.8 Population of the study
The population which is accessible to the researcher is generally the population used by
the researcher in his/her study. The population is mostly observed by the author in order
to explore the research questions as well as draw conclusion from it. The population is
generally seen as a subset of the target population determined by the researcher.
Therefore, they are often termed as study population from an academic viewpoint. The
accessible population is therefore used by the researchers in order to develop the
samples. Every research work requires a particular population and the researcher tries
to evaluate his work on the basis of the opinion given by the population ( Wildemuth,
2016). The researcher can apply any kind of technique as well as method to the
population in order to generate the findings. However, population does not only allude to
individuals, but also alludes to objects or things. The examination population for this
research work has involved the real estate sectors of the developing nations. The
researcher has examined both the residential sectors and the commercial property
sectors for this work. Therefore, both the sectors would be considered as the key
parameter for generating property index in most of the developing countries in the
world.
3.9 Research strategy
Research strategy is referred to the step-by-step plan of action which is used by the
researchers for providing direction to their own efforts and thoughts. This enables the
researcher to implement the research in a systematic process. The researcher is
37

therefore able to produce quality as well as accurate outcome along with a detailed
report on the study. Therefore, it can be said, in order to provide more accurate
outcomes, the researcher has applied to an effective strategy to evaluate “the rise and
fall of real estate sectors in the developing nation” (Fletcher, 2017). In the first stage of
the current study, the researcher has focused on the current as well as past research
inventories to understand the impact of the real estate industries on the developing
nations. In the second phase of the study, the researcher has tried to evaluate some of
the gaps in the data which are existing. In the third phase of the study, the researcher
has exploited several departments in order to maximize resources so that he/she would
be able to come up with a detailed informative work. In the fourth step, the researcher
has tried to evaluate the priorities of the study. Finally after accomplishing all the four
stages, the researcher finally begins the research work.
3.10 Research method
Research method is generally classified into three broad categories and these include
mono method, mixed method and multi method. Therefore, in order to understand the
impact of the rise and fall of real estate sectors on the developing nations, the
researcher has used mono method. Mono method consists of a single type of method
and this is either quantitative or qualitative method. This research design has been used
in this study in order to address the social problem in the developing nations in
accordance to the rise and fall of the property market. Mono method has been used by
the researcher for this study so that he is able to come up with more practical solution to
the social issue which he has addressed in this study (McCusker & Gunaydin, 2015).
However, it has also been considered by the researcher that mono-method is weak as
well as inadequate for providing comprehensive solution to the research problems. The
disengagement of the scholar policy is responsible for disconnecting the focus of the
researcher real-life as well as urgent policy issues. Therefore, the social relevance is
questioned by this particular problem. However, mono method also contributes to the
development of scholarly conversations and it is due to this conversation, the
researcher has been able to come up with effective information on the rise and fall of
real estate sectors in the developing nations.
38

3.11 Sampling method
Since the researcher has used a population for the study, sampling method would be
applied to this research work. Sampling has been used by the researcher for selecting
subset from the target population that is the residential property sector as well as the
commercial property sector. This is a survey methodology used for a quality assurance.
Sampling has been done in order to comprehend the characteristics of both the
commercial sectors as well as the residential real estate sectors. The researcher has
applied this method especially because it is cost effective and data is collected much
faster in this process (Lushey & Munro, 2015). Therefore, it is considered more effective
than having to measure the whole population. One of the most significant aspect of
sampling includes the process of observation and therefore, it has been used by the
researcher to observe the real estate sectors in the developing nations, especially the
residential and the commercial sectors. Once the process of observation is
accomplished, the researcher would be able to develop theories and test them. The
results might come in form of either probability theory or it might come in the form of
statistical theory. The researcher has applied to the statistical theory in this study.
Therefore, all the findings from the research work has been generated in the form of
quantitative data and several statistical tools have been used to test the quantitative or
numeric data.
3.12 Collection of data
Generally, two kinds of data collection methods are applied by the researchers in their
work and these include the primary and the secondary method. The data collection
method is considered as the most fundamental requirement of the study. The
researcher has used secondary method of data collection in this study. All data has
been accumulated since the year 2014. Most of the data has been gathered from the
property index of the developing countries which are mostly published quarterly on the
webpages of the respective governments (Aithal, 2017). Therefore, it can be understood
the researcher has avoided the use of raw data to evaluate “the rise and fall of real the
estate sectors in the developing nations”. Instead, the data which have been previously
accumulated by someone else, has been explored for this study. This method is popular
among the researchers as it is cost effective and enables a researcher to access a large
39

pool of data. The enhanced use of the internet has added to the benefit of the
researchers as data are available in abundance on the internet. A large number of
secondary resources has used by the researcher to evaluate the impact of the real
estate sectors on the developing nations and these include authoritative publications
like academic books, peer-reviewed journals, government manuals, articles and
newspapers.
3.13 Data Analysis
This requires the researcher to evaluate and interpret the data accumulated by him/her
in order to examine the rise and fall of the real estate sectors in the developing nations.
Therefore, the researcher would be able to establish deductions as well as informed
inferences on the development of the real estate sectors in the developing countries.
Descriptive and inferential statistics is required to be employed with the use of the SATA
program, in order to aid the analysis (Ørngreen & Levinsen, 2017). The researcher has
also used Microsoft Excel in order to process the outcome of the data accumulated by
him/her for this study. The researcher would use both tabular form as well as graphical
form to represent the data.
3.14 Diagnostic test
Diagnostic tests are commonly known as the statistical review of the data which has
been collected by the researcher. Since, the researcher has accumulated secondary
research, the diagnostic test would be carried out on those. The statistical review is
generally used by the researcher for measuring the accuracy of the diagnostic tests. A
number of diagnostic tests can be conducted on a single factor to evaluate the relation
between the factors. It would either be positive or it would be negative. It has been
revealed that the test conducted by the researcher for measuring the actual
performance or the predicted value does not only depend on the specificity and the
sensitivity, but it also depends on the prevalence of the real estate sectors which have
been tested in the target population (Kothari, 2004). A number of methods have been
applied by the researcher to evaluate the impact of the rise and fall of the real estate
sector in the developing nations. Some of the methods applied by the researcher
include multi-collinearity which is measured with the use of variance inflation factors
40

along with the correlation between the figures which have been obtained on the basis of
depicted trends. This has been assessed with the use of Dublin Watson Statistics.
Several other statistical tools like Skewness as well as Kurtosis have been sued by the
researcher in order to comprehend the normality test.
3.15 Research validity
Validity of the research is used for indicating the soundness of the research work
carried out by the researcher. The research validity is applied to both the design of the
research as well as methods of the research, to be more specific. Validity in the
research work is the findings of the researcher that truly represents the phenomenon
claimed by him/her. Therefore, it can be suggested that the valid claim of the researcher
is termed as the solid claims. If the research work is not valid, it may not be approved or
be associated with certain legal issues (Walliman, 2017). Most of the researchers show
major concern regarding the validity of the work. Therefore, it has been suggested that
any form of research work including the “The real estate sectors in the developing
countries: the rise and fall of real estate” might be affected by the various factors which
might invalidate some of the findings while extraneous to validity concerns. Therefore,
the researcher has controlled every possible factor which might threaten research
validity while evaluating “the real estate sectors in the developing countries”, because it
is considered as the primary responsibility of an ideal researcher. Moreover, the validity
of the research work might be affected due to the inaccuracies within the study. This is
difficult for the researcher to control. It might be affected due to the wrong interpretation
of the data accumulated by the researcher.
3.16 Research ethics
Research work, especially those involving human subjects is generally associated with
complex as well as unique ethical, social, political and legal issues. The ethical issues in
a research work is raised particularly when human subjects participate in the research
work. Therefore, in order to comprehend, “The real estate sectors in the developing
countries”, the researcher has tried to maintain all the ethical standard to protect the
human subjects as well as to avoid legal issues. All the three objectives have been
maintained by the researcher while obtaining data on the real estate sectors in the
41

developing countries. The first objective of the research ethics is considered as the
broadest ethics and it includes protecting the human subjects involved in the research
work (Desai & Potter, 2006). The second objective of research objectives ensures that
the interests of the individuals involved in the research, the groups involved in the
research and the society as an entirety are served. Finally, the third objective of the
research work is to ensure the examination of a particular project or research activities
for ethical soundness. Therefore, a responsible researcher is supposed to manage
risks, protect the confidentiality, and etc. Some of the ethical considerations followed
while conducting the research work on the real estates in the developing countries are
discussed below:
 The participants of the research work were not subjected to harm in any manner
at all.
 The dignity and the respect of the participant of the research work were
prioritized by the researchers.
 The consent of all the participants was obtained by the researcher before
conducting the study.
 The research has ensured the confidentiality of all the participant data used by
him/her for the research work.
 The anonymity of the individuals, as well as the organizations involved in the
research work, have been maintained by the researcher.
 The privacy of all the participants has been protected by the researcher while
conducting the study.
 The exaggeration, as well as the deception about the research aims and
objectives, has been avoided by the researcher while conducting the study.
 The process of affiliation, the different funding sources, and the possible conflicts
involved with the study have been declared by the researcher to the participants
prior to the commencement of the study.
 The researcher has communicated honestly with the participants and
transparency was maintained as well.
 No misleading information has been included by the researcher in the study.
(datasciencecentral.com 2019)
42

3.17 Research limitations
The research has a number of limitations while conducting the research work and some
of these are discussed below:
 Issues with selection and sample: Error in sampling is a common problem
faced by most of the researchers and this is generally caused when probability
method is used by the researcher in order to select a sample from the target
population. As a consequence, limitation in the outcome might be noticed and
this is commonly known as “selection bias” or “sample bias”.
 Insufficient sample size: Size of the sample is required to be sufficient in order
to produce a valid outcome. Therefore, if the sample size is inadequate. Then the
significant relationship would not be identified from the data (Wildemuth, 2016).
Therefore, the statistical test would not be effective if the sample size is not large.
 Lack of previous data: Researchers are often unable to find adequate data
from previous sources and therefore, they are unable to develop a theoretical
foundation for the study. This generally leaves a gap in the work, however, it also
allows the researchers to identify the gaps in the previous works.
 Techniques, instruments, and methods: A number of researchers are unable
to produce the outcome of the data or information collected by them due to the
lack of statistical techniques, instruments, tools, and methods, which are
necessary for testing the hypothesis. Therefore, the researcher finds it difficult to
analyze the data accumulated by him/her in this process and due to this, the
outcome of the research work is affected. Thus, researchers must make at least
one statistical tool available before conducting the research work.
 Inadequate time: It has also been revealed by a number of researchers that
they are unable to conduct a study successfully due to the lack of adequate time.
In cases like this, the researcher has to end the process before completion and
therefore, the outcome is not produced. Due to this, the effort of the researcher is
wasted. (differencebetween.net 2019)
43

3.18 Reasons for adopting this approach
The researcher has used quantitative data because the accuracy level of using numeric
data is higher than that of the qualitative data. Moreover, quantitative data has allowed
the researcher to test the relationship between the factors. It has also enabled the
researcher to establish theories and develop a hypothesis based on those theories. The
use of quantitative data is more preferable because it cannot be manipulated and the
use of these data has proven to be more effective for the researchers. These data can
be represented in tabular form as well as in graphical form, and therefore, testing them
become less complicated (Fletcher, 2017). The researcher has chosen secondary data
collection method because it is believed that it is more cost-effective and less time
consuming than primary data. Apart from this, it enables the researchers to access to a
large pool of data from multiple sources, and adequate and quality information relevant
to the study can be accessed from the internet as well and it is absolutely free of costs.
Moreover, it is because of the secondary data collection method, the researcher has
been able to identify the gaps in the literature. Therefore, he has been able to work in
order to fill the gaps which exist in the previous literary pieces.
3.19 Summary
This methodology would enable the researcher to apply a scientific approach to the
study, and therefore, with this methodology, the researcher would be able to come up
with an accurate outcome. The methodology has enabled the researcher to identify the
research problems associated with “the rise and fall of real estate sectors in the
developing nations”. The methodology has also allowed the researcher to review the
previous literature on this topic and evaluate it to produce his/her own theories and
concepts. The researcher has also been able to formulate a problem with the research
methodology in an effective manner. The researcher has also been able to identify the
methods of sample selection and take the preparation of different tools and techniques
required for the analysis of the data accumulated by him via secondary methods. This
process has also allowed him to understand the techniques of collecting data in an
effective manner so that the relationship between the factors can be understood. The
methodology has enables the researcher to identify the effective ways which are
required to interpret the data accumulated by him. These are some of the ways the
44

researcher has been benefitted from the research methodology, he has been able to
identify the proper design as well as methods appropriate for this particular study. Thus,
it can be said that the research methodology is one of the most integral parts of the
research work.
45

Chapter 4: Data Analysis
4.1 Details of data analysis
4.1.1 Discussion of data and sources
The researcher has used several sources to accumulate secondary data on the rise and
fall of the real estate sectors in the developing countries. The researcher has gathered
data most on those developing nations where real estate plays a significant role.
Developing nations rely greatly on the industries of real estate for the overall growth and
development of the nation. The researcher, therefore, particularly focused on nations
like China, India, Egypt, Brazil, Mexico because the impact of real estate sectors is high
in these countries. The researcher has tried to evaluate how these nations are affected
with the rise and fall of the real estate sectors and how the sectors contribute to the
economic growth and development of these countries (Silverman, 2018). Since China is
considered as one of the most significant developing nations, the researcher has
accumulated a large amount of information and data about the country. “National
Bureau of Statistics of China” has made a significant contribution towards the
information gathered by the researcher. Apart from this, the researcher has accessed to
the government census of some of the developing countries to gather adequate
information. Newspaper reports, peer-reviewed journals, published authoritative pieces
like books and magazines, scholarly articles, websites, online articles have contributed
towards the secondary data collection. The researcher has been able to access a large
pool of data to gather the data, then the data has been refined by the researcher, at
last, they are presented in graphical and tabular form for the purpose of analysis and
interpretation.
The researcher has gathered significant information on the population growth of
particularly five developing nations like China, India, Mexico, Egypt, and South Korea to
evaluate how the growth rate of the population might affect the development of the real
estate sectors in these nations (Wickham, 2016). The researcher has also tried to
evaluate the GNP or Gross National Product of the developing countries in order to
comprehend how much the economy of these nations depends on the real estate
sectors. Since Egypt is also considered as a significant nation, the researcher has
46

worked on the data of this country as well. The real estate sectors of Egypt have been
compared and contrasted with the other sectors of Egypt to understand the contribution
of this sector to the overall growth of the nation. The researcher also worked extensively
on the data of China to evaluate the monthly investment for the year 2008 as well as
2009. The researcher compares the monthly investment of 11 months that is from
February to December, of both the years (Friese, 2019). The overall data of both the
years have also been compared between both the years. Apart from this, the
investment of China has also been evaluated on the basis of Region to understand if
the investment from real estate varies with the region. The researcher has therefore
worked on different countries to understand the impact of real estate. The researcher
has been able to address some of the gaps in previous research as well.
4.1.2 Sample structure and size
Since the data has been collected mostly from secondary sources the structure of the
sample is a little different. The data has been collected from different sources regarding
the factors that are highly associated with real estate and are relevant to the current
discipline. The sample serves the interest of the author and furnishes the researcher
with details regarding the factors influencing the rise and fall of the real estate industry
in the developing countries. The sample provides information that is directly related to
the proposed aims and objectives of the study on which the research questions are
based. The researcher has conducted quantitative analysis for deriving numeric
outcomes from the findings (Martinez et al., 2017). In quantitative research and
statistics, a sample is a set of collected data that have been derived from a statistical
population with the utilization of a defined methodology. The elements that are
incorporated within the sample has been termed as sample units, sample points or
sample observation. Generally, the population from which the sample has been derived
is large and the implementation of a complete census and enumeration with each and
every value is impractical. Therefore, the researcher limits the data to a sample that the
researcher wanted to observe. The size of the sample differs since the researcher
observes inanimate objects from different secondary sources. However, these sources
are peer-reviewed and authentic materials that are completely relevant to the study and
address the objectives of the research to support the author’s claims.
47

Typically, there are two inclusive procedures in which the process of sampling is
implemented in research (Little & Rubin, 2019). These two common procedures are
non-purposive sampling and purposive sampling. The researcher was especially
cautious at the time of choosing the appropriate sampling method that would best fit the
requirements of this study. The researcher employed the non-purposive method of
sampling popularly known as random probability sampling as opposed to non-
probability sampling. Random-probability is apparently the most acclaimed technique of
data sampling. In this technique of sampling a smaller sample size is derived from a
large population with the use of the probability theory. Each participant or object is
considered to be a probability sample and the object or the individual is selected
randomly from the population. In the probability technique of sampling, each object or
individual in the population has equal chances of being chosen for observation.
However, the sample which has been considered for the collection of data must
represent the population from which it belongs and must share the same characteristics
with the other element or individual of that population. Probability sampling or purposive
sampling is more convenient because the researcher has the freedom of choosing
randomly without the arrangement of prior assessments (Dunn & Davis, 2017). This
process is more cost-effective and time-effective compared to non-probability sampling.
Since the researcher has gathered details from secondary sources random-probability
technique was the best choice that the researcher has employed. The researcher has
gathered information regarding the sector, population, economy, GNP and has
considered these factors for observing its impact on real estate.
4.1.3 Principle findings
1. Real estate growth in Egypt against other sectors
Sector Percentage
Agriculture 21%
Extractions 43.70%
Manufacturing 63.10%
Public facilities 2.40%
Construction 12.50%
48

Retail and wholesale 18.10%
Transport 6.80%
Communication and information 7.50%
Canal 2.50%
Finance 11.60%
Tourism 40.80%
Real estate 9.40%
Social service 9.30%
Government service 20.30%
Table 1: Sector comparison
(Source: https://www.researchgate.net/figure/Contribution-of-economic-sectors-in-GDP-
growth-rate-in-2013-2014-Source-Drawn-by-the_fig10_316590343)
Graph 1: Sector comparison
49

(Source: https://www.researchgate.net/figure/Contribution-of-economic-sectors-in-GDP-
growth-rate-in-2013-2014-Source-Drawn-by-the_fig10_316590343)
Concerning the case of Egypt, it could be observed that the growth of the real estate
industry has been slower compared to the other sectors. The manufacturing sector has
shown maximum growth in recent year with the growth rate by 63.10%. Compared to
the leading manufacturing sector, the growth rate of the real estate industry is
substantially lower with a growth percentage by only 9.40%. However, the growth rate in
other Middle-East countries has been stable. The growth rate of the other Asian
countries is also stable compared to the growth rate of Egypt. The manufacturing
industry of Egypt is the largest source of employment and GNP. Egypt is a developing
country which has been attracting tourists from all around the world. However, its slow
growth in the real estate sector has affected the hospitality industry which is closely
related to tourism (Little et al., 2015). A few years ago, tourism was the leading sector
with the maximum growth rate. The slow rate of growth in the real estate industry has
affected the opportunity of employability. The other countries in the Middle-East have
prospered in this aspect with Abu-Dhabi and Dubai becoming the hub of employment
dragging employees from everywhere around. The fall of the real estate industry in
Egypt has largely affected the corporate sectors of the country. While it swelled in
tourism, extraction, and manufacturing, the economy of the country is largely affected
by the slow-moving industry of real properties. It has failed to meet the increasing
demand for urbanization around the country. The people from the less privileged areas
are trying to move into the cities for enhancing the quality of life and for the opportunity
of getting employment. However, the slow-moving industry of the real estate has
remained deficient contributing to the critical condition. This has also led to an
unorganized property market.
2. Dependence of Asian economies on real estate
Country Real estate exposure as GNP
percentage
Hong Kong 76%
Malaysia 58%
50

Taiwan 58%
Singapore 30%
Thailand 44%
Phillippines 17%
China 9%
Indonesia 7%
Korea 17%
Table 2: GNP
(Source: https://www.researchgate.net/figure/Real-Estate-Sector-and-National-
Economy_tbl1_5129604)
Hong Kong
Malaysia
Taiwan
Singapore
Thailand
Phillippines
China
Indonesia
Korea
0%
10%
20%
30%
40%
50%
60%
70%
80%
76%
58% 58%
30%
44%
17% 9% 7% 17%
Real estate exposure as GNP percent
Graph 2: GNP
(Source: Excel)
The table above is representing the dependence of the Asian economy on the market of
real estate in the developing countries like Phillippines, Hong Kong, Korea, China,
Indonesia and etc. Developing countries in Asia largely depend on bank loans for the
development of the real estate market. The intervention of the small and local investors
in this market has increased loan. The above graph displays the GNP percentage of
some of the Asian countries. The researcher in this respect has found an
51

interrelationship between the nonperforming loans that have directly affected the
property of the banks and the performance of the property market in most of the
developing countries in Asia. A troubled sector of real estate could lead to an increased
ratio of non-performing loans. The exposure of the Asian economy to the sector of real
estate is substantially large. Countries like Hong Kong and Taiwan are subject to huge
loans. The debt to the ‘Gross National Product (GNP) was around half in Malaysia and
Taiwan and was over three quarters in Hong Kong (Franke et al., 2017). Over the years
this land scenario has enhanced to some extent and the problem of non-performing
loans has decreased relatively in some of the developing countries of Asia. The amount
of non-performing loans has affected the outcome which has been represented in the
above table and graph. The increased ratios of nonperforming bank loans could affect
the economy of the nation brewing serious trouble. Although the current scenario of the
property market has improved in developing countries, it is yet to reach an organized
position in most of the developing countries. Only a few countries in Asia have an
organized property market while the rest have fallen flat in the hot economic condition
band competitive environment. The financial crisis of Asia is said to have occurred as a
result of this.
3. Population
Country Recent growth rate (apr)
China 13%
S.Korea 13.2%
Brazil 18%
Mexico 20.5%
India 21%
Table 3: Population
(Source: https://www.researchgate.net/figure/Population-Growth-1990-2002-Selected-
developed-and-developing-countries_fig9_258260969)
52

China S.Korea Brazil Mexico India
0%
5%
10%
15%
20%
25%
13.00% 13.20%
18.00% 20.50% 21.00%
Recent growth rate (aprx)
Graph 3: Population
(Source: Excel)
It can be seen from Graph 3 that the growth rate of population in some of the
developing country has been affecting the development of the real estate industries.
Although the population of China is higher than any other country in this world, the
growth rate of China has dropped with the adoption of birth policies. Therefore, the
growth rate of China in the recent year has been 13%, lowest among the five nations
represented on the graph. The growth rate of South Korea is slightly higher than that of
China, 13.20%. The growth rate in Brazil is 18%, while in Mexico, it is 20.50%. The
growth rate of India is higher than any other nation of the world and the Indian
population is enhancing at a rate of 21%, slightly higher than that of Mexico (Yan et al.,
2016). The high rate of population growth has affected the real estate to a considerable
extent in some of the developing countries. While these countries depend greatly on the
industries of real estate, they are supposed to keep in mind that such an increased rate
would exert high pressure on this sector. While China and South Korea has a relatively
slower growth rate of population, Mexico and India have exhibited an uncontrollable
growth rate. This has seriously affected the rea;l estate market in Mexico and India. The
rural areas are severely underdeveloped in both these countries which are compelling
53

the people to move into the cities from the rustic localities in search of job and quality
living. However, the growth rate of both residential properties and corporate properties
has failed to meet the increasing demand of the population. This has led to the rise of
slums in the cities and towns. As the demand for loans and house is unbelievably high,
the price and value of the property have increased over the last few years. The rate of
mortgage simultaneously increased following this scenario. The critical condition of
these countries resulted in the practice of fraudulent activities related to property
purchase and property development.
4. Monthly investment in the Real Estate Industries of China
Monthly Investment for the year 2008
February 237.37
March 231.40
April 226.43
May 256.72
June 367.64
July 268.79
August 254.64
September 284.77
October 264.00
November 262.80
December 403.41
Table 4: Monthly investment in the Real Estate Industries of China (2008)
(Source: Self-created)
Monthly Investment for the year 2009
February 239.82
March 248.21
April 240.97
May 277.72
June 422.82
July 309.69
54

August 334.86
September 381.91
October 332.66
November 338.43
December 496.08
Table 5: Monthly investment in the Real Estate Industries of China (2009)
(Source: Self-created)
Graph 4: Monthly investment of the real estate industries in China
(Source: http://www.researchinchina.com/Htmls/Report/2010/5844.html)
It can be seen from Table 4, Table 5 and Graph 4, that the monthly investment of the
real estate industries of China has been evaluated for the year 2008 and 2009,
respectively. It can be clearly seen from Graph 4 that the investment during the first
three months in the years 2008 and 2009 has been stable. There is a slight
enhancement during the fifth month. In the year 2008, the investment in the fifth month
increased to 256.43 from 226.43 in the fourth month. In the year 2009, the investment
during the fifth month enhanced to 277.72 from 240.97 in the fourth month. Therefore, it
can be said that the performance of the real estate sector has been impressive in the
fifth month of both the years. The performance continued to make impressive
55

improvement during the sixth year and it can be seen from Graph 4 that there is a
massive increase. In the year 2008, the investment during the sixth month increased to
367.64 from 256.72 in the fifth month. While in the year 2009, the investment during the
sixth month increased to 422.82 from 277.72 in the fifth month (Franke et al., 2017).
The investment dropped again during the seventh month, and it continued to drop even
more during the eighth month of the year 2008. However, in 2009, the investment
dropped during the seventh month as well, but it slightly enhanced during the eighth
month. In the year 2008, the investment increased during the first 9 months but again
dropped during the following two months. While in the year 2009, the investment
dropped in the tenth month, but again enhanced in the eleventh month. The impressive
in the last month has been impressive in both the years. In 2008, the investment during
the twelfth month increased to 403.41 from 262.80 in the eleventh month. While in the
year 2009, the investment during the last month increased to 496.08 from 338.43 in the
eleventh month.
5. The investment of Real Estate industries in China by region
The investment of Real Estate industries in China by region
Region Investment (in %)
South 11.2
Northwest 4.5
Southwest 10.9
Central 10.6
North 16.2
Northeast 10.9
East 35.7
Table 6: The investment of Real Estate industries in China by region
(Source: Self-created)
56

Graph 5: The investment of Real Estate industries in China by region (2009)
(Source: http://www.researchinchina.com/Htmls/Report/2010/5844.html)
It can be seen from Table 6 and Graph 5 that the real estate investment in China varies
with the region. While some region invests more on real estate, the investment of the
other region is not that high. The real estate investment of the southern region of China
is 11.2%, while in the northwest region of China, the investment is only 4.5%. The
Southwest region of China and central China almost make the same percentage of
investment from the industries of real estate. While the southwest region has made
10.9% investment, the central part of China showed a rate of 10.6% investments. The
investment of the northern region is 16.2%, which is higher than the southern region of
China. It can be seen from Graph 5, that investment in the Northeast is much more than
that of Northwest, it is as high as 10.9%. The table and the graph show that investment
in the Eastern part of China is much higher than any other region. It has made as much
as 35.7% in the year 2009 (Yan et al., 2016). It is believed by the researchers that
Eastern part of China is more developed than the rest of China and it relies mainly on
the industries of Real estate, while the other parts of China rely on agriculture mostly. It
57

has also been found by the researchers that the economy of Eastern China is booming
with a large population, and this is the primary reason for driving the investment of real
estate in this region. The northern and the eastern part of China are accounted for
almost 50% of the total share of the Real Estate sectors, and therefore, these two
regions are highly developed. This is one of the main reasons why the eastern part of
China is considered ‘developed’ China.
4.2 Discussion
Analysis of descriptive statistics
Column1
Mean
0.192142
857
Standard Error
0.047741
043
Median 0.1205
Mode #N/A
Standard Deviation
0.178630
628
Sample Variance
0.031908
901
Kurtosis
1.580714
987
Skewness
1.474618
795
Range 0.607
Minimum 0.024
Maximum 0.631
Sum 2.69
Count 14
Largest(1) 0.631
Smallest(1) 0.024
58

Confidence
Level(95.0%)
0.103138
254
Table 7: Descriptive statistics
(Source: Excel)
The table above represents the statistical outcome for table 1 which displayed the
growth of the real estate sector against the other sectors in Egypt. The standard
deviation is 0.178630628 and is very close to the mean value 0.192142857. A small
standard deviation implies that the variables are closely related to one another. The
mean value is the average growth percentage of the sectors. The skewness value is
more than one which means that there is little symmetry between the data-points which
confirms the progress of the other sectors is much more compared to the progress of
the concerned data which is the real estate industry. The skewness value is more than
one so it indicates that the variables are highly skewed (Silverman, 2018). This further
confirms that this variable would have a strong impact on the economy of the country
which is the dependent variable. The standard deviation is very low which also confirms
the same as justifies the objective of the study. The sum implies the total of all the data
points. The overall statistical findings suggest that the hypothesis confirming the
relationship between real estate development and the national economy of a country
would not be rejected in the process.
Analysis of descriptive statistics
Column1
Mean
0.351111
111
Standard Error
0.082939
812
Median 0.3
Mode 0.58
Standard Deviation 0.248819
59

435
Sample Variance
0.061911
111
Kurtosis
-
1.317985
142
Skewness
0.427912
675
Range 0.69
Minimum 0.07
Maximum 0.76
Sum 3.16
Count 9
Largest(1) 0.76
Smallest(1) 0.07
Confidence Level(95.0%)
0.191259
548
Table 8: Descriptive statistics
(Source: Excel)
The table above represents the descriptive statistics of table 2 which was regarding the
dependence of Asian economies on real estate. The standard deviation that has been
derived is 0.248819435 which is again close to mean value 0.351111111. A small
standard deviation implies that the variables are closely related to one another. The
skewness value is less than 1 which means that the variables are moderately skewed
and the skewed value is 0.427912675 (Schabenberger & Gotway, 2017). This also
suggests a loose but firm connection between the variables. This further suggests that
the Asian economy is highly dependent on the industry of real estate in the developing
countries.
Analysis of descriptive statistics
Column1
60

Mean 0.1714
Standard Error
0.017261
518
Median 0.18
Mode #N/A
Standard Deviation
0.038597
927
Sample Variance
0.001489
8
Kurtosis
-
3.017196
49
Skewness
-
0.261140
285
Range 0.08
Minimum 0.13
Maximum 0.21
Sum 0.857
Count 5
Largest(1) 0.21
Smallest(1) 0.13
Confidence Level(95.0%)
0.047925
657
Table 9: Descriptive statistics
(Source: Excel)
The table above represents the descriptive statistics of the third table and displays the
outcomes regarding the growth of population in some of the developing countries of
Asia like China, Korea, Brazil, Mexico, and India. The standard variation is again close
to the mean. The standard variation is 0.038597927 while the mean value is 0.1714.
This implies that the data points are more clustered around the value of the mean. The
value of skewness is 0.261140285 and is less than which implies that the data point is
moderately skewed and again confirms a considerable interrelationship between the
variables (Friese, 2019). It further establishes the fact that population growth affects the
real estate industry largely and these are the countries which are highly affected by the
increasing population. This also allows the researcher to meet some of the objectives of
61

the study regarding the factors impacting the development of real properties. The
hypothesis stated regarding this is thus accepted.
Analysis of Two sample T-Test for Table 4 and Table 5
Variable 1 Variable 2
Mean
277.997272
7
329.379090
9
Variance
3180.10444
2
6488.43580
9
Observations 11 11
Pooled Variance
4834.27012
5
Hypothesized Mean Difference 0
Df 20
t Stat
-
1.73310691
8
P(T<=t) one-tail
0.04923439
3
t Critical one-tail
1.72471824
3
P(T<=t) two-tail
0.09846878
6
t Critical two-tail
2.08596344
7
Table 10: Two-sample T-test
(Source: Excel)
Tw-sample T-Test has been used by the researcher to understand the relationship
between the two variables and test the hypothesis as well to understand if the
Hypothesis has been accepted or rejected. It can be seen from the table that the mean
value of the second variable is more than that of the first variable, and the value of the
62

hypothesized value is 0, therefore, it can be said that null hypothesis is accepted
(Martinez et al., 2017). Thus, it can be evaluated from the table that the difference
between the mean value of the population selected for the evaluation of the rise and fall
of the real estate sectors in the developing nation is 0 as well, and therefore, it is not
required to subtract the value from the statistics.
Analysis of descriptive statistics for Table 6
Column1
Mean
14.28571
429
Standard Error
3.792312
31
Median 10.9
Mode 10.9
Standard Deviation
10.03351
526
Sample Variance
100.6714
286
Kurtosis
4.730608
6
Skewness
2.017312
77
Range 31.2
Minimum 4.5
Maximum 35.7
Sum 100
Count 7
Largest(1) 35.7
Smallest(1) 4.5
63

Confidence Level
(95.0%)
9.279453
933
Table 11: Descriptive statistics
(Source: Excel)
Descriptive Statistics have been used by the researcher to evaluate the Kurtosis and
the Skewness value. The researcher has also tried to interpret the mean, median and
mode value to analyze the data of the real estate sectors in the developing countries.
The mean value is 14, however, the median and the mode are equal, that it 10.9. This
has allowed the researcher to understand the average value of the variables or the
different regions of China. It can be seen from the table that the confidence level is
95%, which suggests to “the true mean of the target population”, which include the
residential and the commercial real estate sectors of the developing countries. Since
the skewness value is greater than 1, it can be said that the distribution between the
variable is highly skewed. Since the value of Kurtosis is more than a 3, it can be said
that the value between the variables is not normally distributed, and therefore, it is high
(Little & Rubin, 2019).
64

Chapter 5: Conclusion
5.1 Summary of findings
The overall findings suggest that in some of the developing countries the growth rate of
the property market has been relatively slower than most other active sectors. This is a
consequential effect of the slow process of urbanization in countries like Brazil and
Egypt. On the other hand, the growth rate of the property market in other Middle-East
countries has been stable. Some of the Asian countries like China and Japan have a
stable economy which has supported the stark rise of the property graph. Despite
having a stable growth rate in the property market, some of the Asian and African
countries are struggling with overpopulation and land demand. This land scenario has
led to an unorganized growth of real properties. The Asian economy largely relies on
the property market. Most of the developing countries in Asia are agro-based. The
agricultural sectors make a large contribution to the national economy. Over the last
decade, the real estate industry has acquired a stable market position placing itself after
the agricultural industry. A few economists have forecasted that the property market is
the potential of taking over the agricultural sectors in the developing countries (Epstein,
2017). The exposure of real estate as GNP percentage is maximum in Hong Kong
followed by Malaysia and Taiwan. On the other hand, China and Indonesia have
minimum exposure to real estate as a GNP percentage. The developing countries are
subject to huge non-performing loans and the exposure of the economy of Asia to the
real estate sector is substantially high. The amount of non-performing loans have
affected the national economic outcomes in most of the developing countries around the
world.
The overall findings in the current study suggest that the population of a country largely
affect the property market. China has the highest recorded population but the growth
rate has substantially reduced over the years (Grant, 2018). On the other hand,
countries like India and Mexico have a considerably high rate of population growth
which is yet to be mitigated. This has increased land demand and urbanization has
paved its way into some of the most remote areas. The people from rural areas are
consistently moving into the cities looking for jobs and also for enhancing the quality of
65

living. As a result, the demand for property is high failing to comply with the limited
supply. As a result, the price of property has increased and consumers are required to
pay more than the original valuation. The monthly investment in properties is
consistently increasing in China and some parts of Latin America. The Eastern regions
of China have invested the most in real properties. China has exhibited maximum
growth and development in the property market followed by the Middle-East countries.
While some of the countries would excel in this area shortly, the others would fall flat
failing to qualify as an organized market. However, the overall progress of the property
market in developing countries over the past decade has been dynamic exposing
scopes and opportunities.
5.2 Linking with questions and literature
The research questions basically help in framing the structure of the research. The
questions provide an extensive idea regarding how the researcher would approach the
study. The articulation of the questions is significant from the standpoint as it lays the
foundation of the discussion. The first question was regarding the contribution of the
property market to the national economy of the developing countries. The researcher
has addressed this in both the literature review and data analysis. In this respect, the
researcher has discussed GNP and non-performing bank loans which have affected the
economy of the country. The researcher stated the second question regarding the risks
associated with this sector and in this regard has revealed the frauds and complexities.
The benefits and the disadvantages are also discussed in the review of literature for
aiding new investors with a general idea of the pros and the cons. Investing in this
sector could be a risky venture especially when the investor is new in this (Cao &
Porter-Nelson, 2016). The intervention of the local investors and inexperienced non-
professional investors has led to the vigorous development of an unorganized sector.
The number of legal suits relinquished projects and off-plan properties have increased
over the decade affecting the national economy. Some of the major associative risks
are mentioned in the review of the literature and the researcher briefs regarding how
such risks could be mitigated. The researcher has also provided several advantages
that could benefit first-time investors and debtors who are subject to mortgage fees and
home loans.
66

Next, the researcher explores the role of the investors in the industry of real estate in
the developing countries. This question has been addressed throughout the study as
the researcher carefully assesses the responsibilities of the investors. In the developed
countries of the West professional investors are involved in the housing sector. As a
result, the investors could come up with professional solutions which are not possible
for the local investors. The intervention of inexperienced investors not only led to an
unorganized property market but has also increased the incidents of fraudulent
practices. The investors need to have a clear knowledge of both the prospects and the
inevitable risks before they invest in a property. They are required to conduct due
diligence of the contract and the owner before making progress. The next question
which would be addressed by the researcher is regarding the interpersonal relationship
between the property market and GDP (Cao & Porter-Nelson, 2016). The growth of
GDP arises from the income that is accumulated through making a property purchase.
The economy has intensified in the developing countries leading to a stable rise in the
GDP. However, the investors find it confusing between investing in residential
properties and corporate properties and some end up making the wrong decision. A lot
of factors related to this are required to be regarded before finally investing in the
property market. A smart group of marketers takes strategic actions for making the most
of the opportunities in the real estate market.
5.3 Effectiveness of the study and relevance of the findings
The study would enable readers to comprehend the concept of real estate sectors in
developing countries. This study has explored the key areas of the real estate industries
and how the rise and fall of this sector affect the economy of developing nations. It is
due to this study, the readers have been enabled to understand the significance of the
real estate sectors in the developing nations as most of the countries depend on this
sector after the agricultural sectors. A number of developing countries have been
analyzed in this study as well including India, China, Egypt, Mexico, and Brazil.
The findings are relevant to identify how the population and the growth rate of the
developing nations have affected the development of real estate industries (Korsakienė
& Tvaronavičienė, 2014). It has been found that the growth rate of India is higher than
67

any other developing nations in the world and the growth rate of Mexico is slightly lower
than that of India. The real estate sector, especially in these two countries, is unable to
meet the demand of the growing population. People from town are moving to the city
and therefore, the number of slums in cities is increasing rapidly, and this has led to a
rise in the prices of the real estate sector as well.
The real estate sectors are growing more rapidly in the developed region of the
developing nations. The findings are relevant as it allows the readers to understand how
the growth and development of the real estate nations vary from one region to the other.
It has also allowed the readers to identify the share of investment from the real estate
sectors. Apart from this, the relevance of the findings lies in the fact that it compares
and contrasts the real estate investment between two respective years to comprehend
the performance of this sector. The study is effective as it enhances the knowledge of
the readers on the real estate sectors and the findings have enabled them to analyze it
quantitatively (Kothari, 2004). The quantitative study has enabled the readers to
understand the difference between the real estate sectors and the other sectors in the
developing nations. Therefore, the readers have been able to measure the contribution
of the real estate sectors to the development of nations like Egypt and China.
5.4 Opportunities for future research
As the developing nations are relying more on the real estate sectors for their growth
and development, the scope of this industry is growing. The researchers in the future
would be able to study the improvements made in this sector over the years. It is likely
that the real estate sectors would grow and develop significantly in the future and thus,
it would leave a huge scope for future research. The future researchers would be able
to address the gap in the literature and explore particularly those areas which are
understudied. They would be able to identify several factors which affect the growth and
development of the real estate sectors. The growth rate has been constantly affecting
the real estate sectors in the developing nation, and therefore, in order to identify the
investment from the real estate sectors, the researcher is required to understand what
the growth rate would likely to be in the future (Vogt, 2017). These are some of the
major areas the researchers are required to focus in the future.
68

Recently, several authors are contributing to the real estate sectors and some of them
have focused on the real estate sectors in the developing countries, especially. These
works would be highly beneficial for the future and create a huge opportunity for them.
They would be able to address these works, analyze them, gather data from them and
address the gap. The developing nations depend greatly on the real estate sectors and
this is one of the greatest scopes for the researchers. The researchers in the future
might as well focus on the scope of the real estate sectors in the less developed regions
in the developing nations and how it would contribute to the growth of the nation as a
whole (Desai & Potter, 2006). The economy of some of the developing nations is
booming and the researchers are required to evaluate the contribution of the real estate
sectors to the economic boom, especially in China.
69

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