The role of research and advisory in real estate

Research and advisory are the bedrock of any business success.

Over the years, many companies, from across different industries, have benefited from this trend to reach their full potential and the real estate sector is no exception.

The involvement of research and advisory in real estate begins ideally at the concept and feasibility study stage of the project and continues in both an advisory and marketing capacity throughout the development cycle, culminating in the sale, leasing, and property management of the completed project.

While master planned communities, mixed-use projects, development plots, and stand-alone developments benefit the most from research and advisory services, the market research team constantly monitors market movement, property prices, and rental trends and provides comprehensive and timely data that is tailored to each client’s needs and requirements.

These include supply and demand analysis, market sector studies, price benchmarking and indices, trends, and competitor analysis as well as occupational surveys.

The how and why 
To begin, the most important factor to consider when conducting research and advisory is that the assessment of any given plot, project, and/or area is influenced not only by internal factors such as unit size, type, layout, condition, parking, security, facilities, and overall age/state of the building, but also by external factors like surrounding area characteristics, proximity to public transportation, ease of access and supporting infrastructure.

A combination of traditional processes and technology-powered tools are then required.

Conducting research through interviews, field and desk research, and internal workshops with valuation, leasing, and  property management departments to determine current leasing/sales rates and buyer/tenant requirements is important.

On the technological front, real estate-specific software, used to make data provided by official statistical sources make sense, continues to gain popularity, and are of utmost importance as they improve the quality and dependability of research and advisory services, as well as adding value to customers and advisors.

Data analytics platforms such as REIDIN use data from the Dubai Development Department (DLD) for example.

Overall, real estate firms should identify opportunities, maximise resources and reduce risks for their clients by offering development and marketing strategic advice, asset disposal/acquisition advisory services, master plan review and advisory services, development consultancy/land use studies and target market identification.

Best practices and methods 
The market value of the property (the price it would fetch if it were put in the market) of property is influenced by a number of factors, including the current market situation, the characteristics of the specific asset, economic and social trends and government regulations.

To determine the value, several valuation methods are available, the three most important of which are:

Sales comparison approach: The property being valued is compared to similar properties sold in that area.

Income or investment approach: The property being valued considers the income it generates or could generate.

Cost approach: The property being valued considers how much it would cost to construct an equivalent property, which is a common method used for insurance replacement purposes.

But can people place their trust in research and advisory? In addition to access to external databases, every firm should create an internal database that provides relevant and specific transaction-based market data, which will serve as a key point of differentiation from competitors in the field.

This will enable the company to base its advice and recommendations on current market rates, providing a thorough understanding of market dynamics, trends, demand, and occupier requirements across all land use categories.

Another fact is that valuations are typically carried out in accordance with the international guidelines published by The Royal Institution of Chartered Surveyors and International Valuation Standards and adhere to the standards and regulations of the local jurisdictions where appropriate.

These standards are designed to ensure both best practice and consistency are at the forefront of any advice provided. As such, we strongly encourage all clients, as a first step, to carefully review the qualifications (both international and local accreditations) of all potential service providers.

Regardless of how much money you intend to invest in real estate, it is always a good idea to conduct adequate and extensive research prior to making a decision, as this will allow you to thoroughly understand the complexities of your prospective purchase.

HP Aengaar is the CEO of Asteco and Provis