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CIPS: Asia/Pacific & International Real Estate
Interpreting Country Assessment
Model Data
Geography
The area can provide a relative measure of potential
market size when compared to other known
markets. The size of the capital city is another clue to
market size. The capital city is typically, but not
always, the major market in a country, and is usually
the one for which real estate data is reported. Resort
areas that attract foreign buyers are important.
Import/export access and costs reveal a great deal
about the accessibility of a market, as does the
existence of convenient trading partners
Favorable characteristics
+ Ease of infrastructure development provides a
good look at intramarket accessibility.
+ Ease and degree of social and economic
interaction provides insight into market
accessibility for internal and external markets.
+ Topographical influences on development can
reveal the market’s national resources including
unique natural resources
+ The higher the density, the higher the real
estate prices.
+ Reasonable consumption-to-savings ratio and
Increasing per capita income
+ An educated workforce and high rates of
literacy.
+ Balance between birth and death rates. Low
birth rates lead to an aging population.
Government
The powers, attitudes, structures, and stability of a
government can determine the success or failure of
the economy. Democracy, open markets, structural
stability, tax incentives, and minimalist regulation
are positive characteristics. Memberships in
agreements and alliances can indicate a country’s
approach to international trade and foreign
investment.
Favorable characteristics
+ Laws that preserve free markets through
minimal restriction of foreign-owned assets
+ Minimal legal restrictions on ownership, capital
flow, wages and prices
People
+ Anti-inflationary monetary policies
Population size corresponds directly to total demand
for real estate, particularly for residential properties.
Population growth rates determine increases or
decreases in housing and retail demand as well as
beneficial or detrimental growth in terms of the
overall economy. More than 3 percent is generally
considered too rapid for sustainable growth.
Population density can influence the makeup of an
economy and the types of real estate properties that
serve the economy.
+ Conservative fiscal policies and balanced
budgets
Favorable characteristics
Economy
+
Capacity of business infrastructure including
communication systems, banking, regulation of
banking, corporate structures, and distribution
systems indicate support for economic activity.
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A stable population growth rate of 1–3 percent
is considered healthy if the economy can keep
up with the needed changes such as housing,
schools and jobs.
+ Reasonable tax laws and rates on income, gains,
sales, imports/exports, corporations, for
domestic and foreign parties
+ Promotion of trade agreements and alliances
+ History of stability
Resources
Survey of base industries, their level of development
and the potential of untapped industries and base
product competitive standing. Availability, costs, and
mobility of labor and management supply. Inflation
rates, including historical periods of depressions or
hyper-inflation, measure the loss or gain of
consumer purchasing power in a market. The higher
the inflation rate, the more products and services
cost. If wages cannot keep pace with inflationary
trends, purchasing power declines along with the
standard of living. Stock markets and exchange rate
trends indicate a country's economic performance
compared to other countries in terms of balance of
trade, inflation and per capita GDP. The size and
compositions of the labor force indicates the
market’s potential attractiveness to foreign
companies who hire local labor. The unemployment
rate is an indication of the economy's actual output
compared to its potential output. GDP is a measure
of a country’s economic health. GDP per capita
measures the economic output per unit of
population. GDP growth measures the trends in
overall output.
The resources, products and industries of an
economy describe its unique character and convey
its level of advancement. Developed economies
typically specialize in manufacturing, technology,
financial services and communications. Less
developed economies are engaged in agriculture,
export of natural resources, and labor-intensive
industries. Exports indicate the economy's strengths
and base industries. Imports reveal the country's
shortcomings, needs and wants. Trading partners
can reveal the country's economic alliances and
dependencies. Trade balances compare the net
difference between total imports and total exports.
A positive trade balance means the production of
exports has outpaced the cost of imports. A negative
trade balance indicates consumption has exceeded
production.
Favorable characteristics
+ Internationally traded currency
+ Stable banking system
+ Controls on liquidity and the money supply
+ Increasing exchange rates against currencies of
other countries
+ Steadily growing GDP
+ Positive trade balance
+ History of stable inflation rates
+ Low unemployment
+ Stable, competitive base products and services
+ Availability of adequate labor and management
+ Technological advancement
+ Developed business infrastructure including
communication systems, corporate structures
and distribution systems.
Infrastructure
Infrastructure is essential for sustaining economic
growth. A country cannot expand or prosper it is
lacks adequate infrastructure systems.
Favorable characteristics
+ Water, power and waste disposal systems
operating below capacity
Real Estate
Notary fees, commissions, stamp duties, land
registration fees, transfer taxes, acquisition taxes
and value-added taxes can all determine the cost of
acquiring a property in a particular market.
Acquisition costs vary from country to country. The
commission rate indicates what cooperating brokers
may expect to earn from a transaction. Rental rates
provide a picture of the market's occupancy costs by
type of property as well as a comparison to other
markets. Patterns in leasing rates are insights into
local supply and demand conditions. Size of the real
estate market can determine the volume of
transactions, the sophistication of the market, and
the potential commission income to expect in the
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CIPS: Asia/Pacific & International Real Estate
market. Vacancy rates quantify the difference
between the market's supply and demand for
properties. Increasing rents and decreasing vacancy
rates indicate a landlord's market.
Favorable characteristics
Cultural Issues
A country's ethnicities, languages, religions, and
history create a country's unique identity.
Understanding a nation's culture facilitates working
with its people.
+ Rational land use regulations
Favorable characteristics
+ Adequate number of support organizations:
title, finance, property management,
construction, insurance, engineering,
architectural, appraisal, and brokerage
organizations
+ Favorable cultural attitudes toward business,
industry, and trade
+ Laws favoring private, unrestricted ownership
+ Reasonable landlord-tenant relations and
leasing
+ Affordable mortgage finance availability
Lease Trends
Lease terms provide comparison data. Quantifying
other occupancy costs, this information also enables
cost comparisons with other markets. Yields reveal a
general relationship between property sale prices
and net income, assuming a property is fully rented.
As demand for properties goes up, yields begin to
fall. (Higher prices divided into net incomes produce
lower returns.)
Favorable characteristics
+ History of attractive investment returns
+ Availability of high-quality properties
+ Positive absorption rate
+ Competitive capitalization rates
+ High occupancy rates
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+ Informed views of world events, and other
nationalities and cultures
+ Religious and cultural norms that do not
preclude open trade with other countries
+ High standards for educational institutions and
medical facilities