INVESTMENT OVERVIEW - AGENTS

Describing the characteristics of an investment area or locality

FACILITIES

Facilities are those services provided by both the public and private sectors for the general use of the public. Facilities includes shopping centres, schools, civic centres, parks, recreation facilities and public transport. The term can also refer to natural attributes such as beaches and nature reserves.

As a real estate investor you should have a rudimentary knowledge of how the important facilities are analyzed and described. For example, you should know the difference between the Primary Trade Area (PTA) and the Secondary Trade Area (STA) of a shopping centre - see the glossary at the end of this module. This knowledge will not only help you in negotiations with real estate professionals such as valuers and agents but will better equip you to sell a project to a bank manger.

You should also be able to describe such facilities in a professional manner. For example, using the shopping centre example, you should be able to describe a shopping centre as either a local, regional, district or neighbourhood shopping centre - see glossary.


LOCALITY MAPS

Most facilities are shown on locality maps such as those available in commercial street directories. Generally, the publishers will allow investors to reproduce such maps in reports so long as permission is obtained and its source is stated. However, remember that you must obtain permission first.

Street Directories typically show within travelling time circles, the proximity of the shopping centres and the bus routes.


EXERCISE

Photocopy the appropriate street directory map of the suburb in which you live. Itemize the facilities that you think are important.

The use of such locality sketches adds a great deal of professionalism to your research and is useful if you are trying to attract finance or an investment partner. The number and type of locality maps are determined by the other parties knowledge of the locality. For example, a potential overseas investor may require a locality map that shows where the capital city or nearest city to the subject property is. Table 1 shows the type of locality maps against type of client.



TABLE 1
EXTENT AND TYPE OF LOCALITY MAPS

OVERSEAS CLIENT AUSTRALIAN CLIENT
Location of country
Location of state or territory
Location of city or town Location of suburb Location of city or town Location of suburb
Location of suburb Location in street Location of suburb Location in street
Location in street Site plan Location in street Site plan
Site plan Site plan


TRANSPORT

Transport, particularly public transport, is an important real estate environment affecting its value. Therefore, the important transport systems should be shown in a investment report and can largely be done on a commercial street directory map. Diagram 1 shows the transport routes and the important bus numbers including the route of the Express bus #333 to the CBD.

Other transport systems should be noted where applicable. For example, in Sydney railway stations, the airport and ferry terminals. The map can also include the approximate time of travel to the CBD or nearest regional centre however, make sure that you state the time as “approximate” or “about” only.


LAND SIZES AND DEVELOPMENT SITES

The real estate investor needs to know the characteristics of surrounding land for a number of reasons. One is to assess potential for subdivisions and perhaps, room for secondary buildings such as “granny flats” or more correctly termed dual occupancies. Usefaul information can be found on specialist government maps available from the appropriate mapping authority such as the Central Mapping Authority (CMA) in NSW. Mapping authorities publish detailed maps of lots, blocks and sections for each urban area. Such maps are known as cadastral maps.

A cadastral map is a map showing “man made” or artificial information and features such as roads, streets and lots. Cadastral maps are most useful for the investor as they also include the legal description of the lots such as the deposited plan number, lot number, area and dimensions - see diagram 2. Such maps can be supplemented by aerial photographs or photomaps which are also available from mapping authorities.

CADASTRAL MAPS

Cadastral map for the area surrounding the subject property. The size of the lots are easily determined and subdivisional potential established by either reading the dimensions directly or scaling the boundaries of a lot using a scale rule.

Whether or not large blocks are capable of being developed will also depend on the local town plan and the controlling authority. In Canberra each lot’s land use is subject to a purpose clause that state the allowable land use. Depending on zoning and other controls, the purpose clause may be upgraded to a higher and better use.


Blocks with development potential because of their size can be marked on the map as can other relevant controls such as on the height of buildings. The code used can be explained on a legend at the bottom of the map. It would also be useful to colour open space areas in green so that they cannot be confused with private blocks with development potential. The availability and access to open space is a desirable feature for residential development.


EXERCISE

Obtain a block and section or lot and deposited plan (cadastral) map of the suburb or town in which you live. List the features and information that the map provides.

What is its scale?
What is the official description of the map?

How can the information provided be incorporated in an appraisal report?

Include a copy of part of the map covering the area you are analysing for investment purposes.



BUILDING STYLES

The investor needs to know the common building styles or architecture typical in the area of analysis. Photos are cheap and it is worthwhile driving around the area and photographing about 20 – 30 typical houses. Such a database can be used to build up a representative sample of styles in the immediate area of the subject block. Because suburbs are developed at different times and stages, similar styles can grouped together to represent typical architecture in that suburb.

Style or architecture is more important than the date of construction and therefore, it is better for the investor to correctly identify style than the exact year of construction. When buildings are dated, use circa which means approximately. For example, “circa 1935”.

Other sources of style are government records for example, where the property tax department carries out improved values. You cab show building styles on a locality map using agency photos of properties that have been previously sold. This is sufficient to convey to the target audience of the report, by way of sample, typical styles in the area and their approximate location.


PERCEPTIONS

Perceptions are the subjective factors that affect the value of real estate. For example, the image and prestige of a suburb’s name. Generally, perception is an important part of residential value so that those localities with the best public perception or image also have the highest sale prices. Public perception is emphasized as the important perception is that of the market place and not the individual opinion of the investor. That is, it is immaterial whether or not the investor likes or dislikes a particular suburb but rather, the acid test of perception is how the public at large perceives the suburb. Therefore, perception is market driven and an investor will soon discover the public’s perception of localities in his/her area with experience.

Evidence of public perception can be gleaned from real estate advertisements. For example in Sydney, properties have been advertised as being “in the Birchgrove area” when they are in Balmain and “in the Balmain area” when they are in Rozelle! From such evidence it can be surmized that the market’s perception of Birchgrove is greater than that of Balmain and Balmain is greater than that of Rozelle. The accumulation of such data on perceptions will enable investors to determine the important perceptions applicable for the subject property. The knowledge of the investor can be further developed from follow up interviews of purchasers of houses in the various localities. Reliable information on perceptions is most important, as it should be used to construct appropriate advertising and promotion material.


DESCRIBE LOCAL PROPERTY AND RENTAL VALUES

THE ART OF DESCRIPTION

The description of local property should be in the form used by professional investors. There is an art in describing real estate in a succinct manner and a perusal of real estate advertisements will reveal the standard form abbreviations used by investors. Look at and read advertisements in the real estate section of the local newspaper and note how well investors can capture the essence (and most certainly the most salient and valuable points) of the advertised property in as a few a words as possible.

The aim of a property’s description is to capture the reader’s interest. Once that has been caught he/she can be entertained with a more verbose description on inspection or inquiry!. Obviously, the investor is the “vendor’s man” and therefore, is only concerned with the advertising of and promotion of the good points of the house. This is quite different from deceiving a proposed purchaser with an inaccurate and illegal (under current consumer law) description. For example, if the house is in poor condition it is quite proper to focus on the positive aspects of location, block size, condition of gardens, aspect and views. On the other hand, if the house is of high quality in a poor neighbourhood it is quite proper to focus on the good points of the house (for example, “a spacious and well kept bungalow”) rather than the locality. Such focus is justified because you are trying to attract purchasers looking for those qualities. For example, a potential purchaser may be looking for a quality house in that neighbourhood (even though it is run down) because he/she has always lived there.


RENTAL VALUES

Researching rental values at the micro level is best done by the property manager analyzing his/her own property management records. For example, an investment report can be written based on the trend of rental values in the locality over the past 5 years. Although the sample may be small, it is “quality” evidence because of the investor’s local knowledge and he/she is analyzing the same properties over time (that is, “everything else is equal”). The investor is able to take advantage of his/her local knowledge in being able to readily adjust rents for changing improvements and changing condition of the improvements.

When rents are analyzed the experienced property manager will be able to analyze those features or variables that are important to tenants. For example, tenants are more likely to be single and childless and therefore, more mobile. Therefore, access to the facilities described above is most important, particularly access to public transport. The investor who analyzes such data is better able to determine and predict rents against the important criteria demanded by tenants. Houses for rent are usually described in basic units such as the number of bedrooms rather than in the total square metres of the house as required by owner occupiers. Another way to determine important rental features is to analyze “to rent” advertisements for the subject locality. A collection of relevant advertisements will soon reveal what the market considers to be the most important features for tenants. This will also quickly reveal any changes in desirable features and rental values. There are commercial analysts who will provide the property manager with a periodic (usually weekly) report of the rental accommodation listed in the local newspapers. This analysis is most useful at it shows the starting rents and the number of days the property has been advertised as to let. Other useful publications include the regular analysis reports carried out by the REIA.

Where property tax authorities prepare rental values for residential property (for example, in Victoria and South Australia) that information should be used as secondary or background evidence as it is generally inferior to the evidence provided by your own lettings. This is because such data is often out of date, the taxing authorities take some time to update their records for changes in the size and condition of the improvements. Your own data is primary data and is more reliable because of your “local knowledge” and experience that knows the exact nature and condition of the subject improvements. That is, there is no greater expert in rental levels for a subject locality than an experienced property manager dealing with lettings, “day in day out” in that locality.

Other useful secondary evidence particularly for background data used in research reports are statistical and analysis publications prepared by government agencies such as the rental bond boards. Such agencies have prepared their reports based on actual rents validated through the deposit of the bond and therefore, are very reliable. Other background data are ABS rental reports. These are useful as they usually cover a large area and the investor is able to use such data for evidence of rentals values at the macro level. For example, a comparative analysis of rental trends between suburbs. However, a problem with most government body reports is that they are often only published twice or perhaps, four times a year so that the information is often out of date. A better method is for the investor to analyze the relevant “for rent” advertisements in the real estate section of the local or city newspaper. The asking rents are a reliable proxy of rental value and are quite valid and reliable for comparison purposes.

This article is only been concerned with residential properties. This is because the discovery and preparation of important valuation variables (such as rents and market value) applicable to commercial, retail and industrial properties is much more difficult, requiring specialized knowledge to accurately analyze. For example, commercial leases need to be analyzed back to an “effective rent” after taking into account a myriad of possible incentive types and outgoings payable by the tenant. This is a difficult and complex task and beyond the scope of an introductory module such as this one.


Describe the leasing market conditions

The leasing market is described using certain leasing statistics that have historically been used in the industry. These are:



MARKET RENT

See market rent

VACANCY RATE

The vacancy rate is the ratio of vacant properties to the total properties at any one time. It is usually measured in terms of properties and expressed as a percentage. For example, if the number of vacant properties on the investor’s rent roll is 20 (after a reasonable period of promotion) and over the same period the total number of properties is 100, the vacancy rate is 20%.

This is an important measure of the status of the rental market. If vacancy rates are increasing then prima facie, supply is increasing over demand and the predicted rents will be less than those today and vice versa. The property manager has to find an appropriate vacancy rate (the equilibrium rate) for his/her rent roll. It may be poor property management to have no vacancies as this may indicate that the asking rents are too low and he/she would be better off by increasing them until the equilibrium vacancy rate is found. The best equilibrium rate for a particular locality is that which will maximise net rental income. This rate is usually found by experience.

ABSORPTION RATE

The absorption rate is closely tied to the vacancy rate. It is the rate at which new rental properties (investment properties) coming onto the market are taken up by tenants. Again, this will be a function of the level of asking rents. It is expressed as a ratio of newly let apartments or flats released on the market over a certain period against the total number released, expressed as a percentage. The investment property owner has to decide the equilibrium rate that his/her property should be taken up. If it is too low, the asking rents are too high and he/she will lose money through vacant apartments. On the other hand if it is too high, he/she can increase the net return by raising the asking rents. An alternative is too raise the quality of the tenant rather than reduce the rent levels. The ideal or equilibrium rate will depend on the locality, type of residential investment property and the exposure of the developer.

Obviously a high absorption rate in an active market will have a trickle down effect on existing housing/flat stock. Where supply increases at a greater rate than demand, the release of such stock will tend to reduce all rents in the locality.


EXERCISE

Make enquires with your local and friendly real estate investors what they think is an appropriate vacancy rate for their locality. Similarly, determine what they think is a fair absorption rate. How do these compare with the REIA published rates for this locality or nearest locality? Discuss and analyse the differences, if any.


Describe recent sales activity

A description of recent sales activity consists of two levels:


Information for the macro description can be obtained from secondary data such as that published by the REIA in their annual, quarterly and monthly market reports. The monthly evidence is the most up to date but may be subject to seasonal factors that are mitigated when using long term data such as annual data. Although secondary, this is reliable information as it is constructed on sales reported by member investors. Its reliability is further enhanced by large size of the sample.

The data should be analyzed over time (temporal analysis) so as to ascertain trends. This will provide good background data for investment reports. The data should be analyzed according to median rather than mean (average) values because the mean is too easily biased by a few large sales that are not particularly representative of the market. The median value is found by grouping the sales into a table of ranges and taking the middle value. At the micro level the investor should use his own sales as a sample of the market population. The larger the number of sales he/she has to analyze, the more reliable are the conclusions drawn from that sample. However, if a small sample is useful because your agency data (for example, rental information derived from the rent roll) is quality data because of your local knowledge. The method for determining the median value is shown in the following example.


DETERMINING THE MEDIAN VALUE OF A RANGE OF SALES

The investor’s sales over the last 6 months are analyzed and grouped in the following table:

TABLE 2

SALE PRICE $ ‘000
RANGE
50 - 100
100 - 150
150 - 200
200 -250
250+
NUMBER
2
5
6
4
1


The median sale is found with the following formula:

MD = (T+1)/2

Where:

MD = median sale
T = total number of sales

Therefore, for above sales data the median sale is:

MD = (18+1)/2 = 9.5 that is the 9th sale.

The 9th sale lies in the range 150-200 (000) and therefore the median range is 150 000 to 200 000.


The other measure of central tendency, the mode is the most common value. This is also a useful measure of central tendency in real estate. For the above table, the mode is also the range 150-200 (000).

Other measures of sale activities are:

THE NUMBER OF PROPERTIES ON THE MARKET

The best indicator of the number of properties on the market is found by analyzing sale advertisements in the real estate section of the local or city newspaper. These will not only indicate the number of properties but also the asking price which when tempered with local knowledge is a good proxy for market value. The successful investor spends a great deal of time analyzing advertisements of properties for sale. They are easily available, cheap and contain a wealth of information about the real estate market. This invaluable source of information is often overlooked by the property professional.

THE SELL OFF RATE

The sell off rate is the ratio of properties sold against those on the market over a certain period. As with the other rates it is expressed as a percentage. A rising rate will indicate either rising demand or a reduction in supply. In either case, and if the trend is firm (that is not a temporary direction caused by seasonal conditions) prices should rise and vice versa.

THE INQUIRY AND LISTING RATES

The agency itself should develop these very useful statistics. If your agency is subject to an increase in inquiries that statistic is evidence of a rising market. The advantage of this statistic is its immediacy compared to the sell off rate. The agency’s statistics should be used to construct the future marketing strategy as that strategy will depend largely on the expected market. For example, if inquiries are rising then it is important to meet the expected increase in demand by increasing listings and sales staff to satisfy the expected demand. A falling inquiry rate would indicate the opposite expected trend.


EVALUATE SALES AND PROPERTY MANAGEMENT INFORMATION GAINED FOR USE IN THE DEVELOPMENT OF A MARKETING STRATEGY

All of the above research statistics should be used to develop a business plan or marketing strategy for the agency. The resultant statistics from the analyzed data should be used to predict future market trends. However, the marketing strategy should be for a short period because of the variable nature of real estate causing a high error in predictions. It suggested that quarterly strategies are a good time period.

FORECASTING METHOD

The forecasting method should not be a complex formula (such as a multiple regression equation) because of the large error (standard error of the estimate) in the predicted result. It is recommended that a simple trend line be used based on the previous 3 months of activity. The trend line can be predicted on an Excel spreadsheet or a financial or statistical calculator. This should be carried out at the micro (agency) level but supported by background data at the macro (regional) level. At the macro level it is better to use predictions and data prepared by secondary bodies such as the REIA and PCA. However, the micro level predictions are the most important because the macro data is probably, too old particularly for a rapidly changing real estate market. Further, the local data has more relevance and greater reliability because of the investor’s expert knowledge of the area.

Basically, the marketing strategy will depend on the market trend predictions for the next 3 months. After analyzing all of the data above, a judgment is made about whether or not the next 3 months will be one of the following:



MARKETING STRATEGIES FOR CHANGING MARKETS

Your comparative advantage over other investors will be your ability to predict the rising market and grasp a new strategy to meet the change before your competitors do. This is why real estate research and analysis is so important. A rising market in the long run will attract greater competition so that the marketing strategy should include the need to act swiftly and try to obtain a “jump” on your competitors. The expected rising market will increase the agency’s gross income (through more sales and higher commissions) and therefore, it is prudent that the agency be prepared to spend more money on advertising, promotion and staff. This will involve careful financial management and controls to:


Therefore, a business plan that shows all projected expenditures and income should be prepared. The plan should be presented according to 3 scenarios:


A similar analysis can be applied to expected sale prices as well as a listing tool. All scenarios are for the predicted trend as that is what your research shows. The real risk comes about by not knowing the full extent of the trend. For example, if the predicted trend is that median house prices in your locality will rise by 10%, the 3 scenarios could be:


Cash flows based on the 3 scenarios will give the agency a good idea of “what if...” scenarios so that for example, it will know the likely exposure if the predictions prove wrong and the market does not increase by as much as expected. The agency may find that if the market only increases by 8% because of its increased costs, it would lose too much. That is, the pursuit of the potential increase in income is too risky. In such a case the agency may revise its figures based on an expected rise of only 8%. If the original expected rise of 10% occurs then the agency will not have made as much as it would have it had budgeted for that amount but has “played it safe” and reduce losses if the market values had increased at a lower rate.

If the prediction is for a falling market in sales, the agency can scale down that part of the agency and concentrate on the relatively more profitable property management side of the business. There is always this trade off in agency practice between sales and property management. A successful agency is one that can quickly move in and out of these two major real estate activities. A problem with a number of agencies is the reluctance of staff to move in and out of sales and agency areas of the business. This problem is compounded by the “glamour” image that the sales side has compared to the more mundane property management. A good agency practice should try to counter such negative images associated with property management and encourage (or even coerce) staff into “multiskilling”. A professional course such as this encourages a property professional capable of working in both areas.

Other factors that enter the marketing strategy equation include the ability of agency to raise money to promote sales for an expected rise in the market place. The value of an agency is largely the value of the rent roll and therefore, the property management area of the business can directly affect the potential expansion of the sales area. The rent roll also has great value to sales because incoming and outgoing tenants are often potential buyers or the landlord may want to sell his/her investment properties or purchase more investment properties. Some agencies with high multiskilling abilities are able to almost completely switch between the two areas by completely buying or selling their rent rolls depending on market predictions.

This article is not concerned with the details of marketing real estate according to different expectations of the market place as these are covered elsewhere in the course. Rather, we are concerned about the general future predictions that will ultimately be the base for the detailed marketing strategy.

EXERCISE

Talk to at least 3 real estate professionals to see what they consider to be important and reliable data they use in the day to day running of their agency. Make a list of the sources of data or information that are available or may be available to you.


COMPARATIVE MARKET ANALYSIS (CMA)

Comparative Market Analysis is a common technique used by investors to provide a means whereby a potential vendor can estimate the expected price or value of their house. This is sometimes known as “self appraisal”. An example of a CMA is shown on the next 2 pages. You can see that it leads the client step by step through a method whereby he/she can make a reasonably reliable estimate of market value. One advantage of this method is that the appraisal is made by the client and not the investor thus relieving the investor of any professional liability that may arise if the investor had provided his/her client with a market appraisal or valuation. The advantage of this in a climate of expanding professional liability cannot be overemphasized.

The other major advantage is that the system clearly underlines the fact that the expected price or market value is a trade off against other factors such as the time to sell.

COMPARATIVE MARKET ANALYSIS (CMA)


MARKET SURVEY ON..........................................................................................................

PREPARED FOR ............................................................BY.............................DATE...........


PRICING YOUR PROPERTY TO SELL



YOUR PROPERTY approx
size 		approx
age 		cond-
ition 		beds garage extras list
price 		price
sold 		days
on
market








NA NA
RECENT SALES






























FOR SALE
NOW

















NA









NA









NA
FAILED TO
SELL

















NA









NA









NA


COMMENTS......................................................................................................................

......................................................................................................................................................

PRICING CONSIDERATIONS

A price range for your property based on similar properties competing with your property today, would be:

NUMBER OF POTENTIAL BUYERS

















$.......................................MAX few



average





many
$.......................................MIN





HOW MUCH TIME DO YOU HAVE TO SELL?

DAYS 180 150 120 90 60 30

--------------------------------------------------------------------------------------------------------------






WHAT IS YOUR PRESENT FINANCIAL POSITION? MORTGAGE MONIES ARE:

READILY AVAILABLE SCARCE DIFFICULT VERY NONE
AVAILABLE DIFFICULT

-----------------------------------------------------------------------------------------------------------


FINAL ASKING PRICE

Align with the above two criteria:

--------------- ---------------- ---------------- ------------------- ------------- ---------


DEVELOP AND MAINTAIN AN ACCURATE DATABASE FOR



The procedures required for the above are those for the construction of a suitable database. A suitable database can be constructed using spreadsheets.

The problem is to make sure that the database includes those variables (fields) that are important for these purposes. Where the investor intends to search for potential clients using the appropriate variables, the starting point should be enquires section of the business. It is most important that your staff when answering enquires obtain from the inquirers appropriate and useful information (see below) rather than dismiss them if what they require is not available. This is best done by using a check list enquiry form that all staff must fill out for each and every enquiry. The information is then entered in the database on a daily basis. For example, the check list for a purchase enquiry may be as follows:



























TABLE 3


PURCHASE ENQUIRY DATE:...............................


LASTNAME.......................................... FIRSTNAMES.....................................

CONTACT TELEPHONE NUMBER...........................................

PRICE RANGE:.........................................................................

WHEN REQUIRED:...................................................................


STREET NO..................... STREET..........................................................

SUBURB.......................... CITY/TOWN...............................

POSTCODE..................



HOUSE REQUIREMENTS

LOCATION.......................................... POSTCODE.......................

STREET..............................................................

NUMBER OF BEDROOMS.................................

TYPE OF CONSTRUCTION...............................

SIZE................................................. STYLE/YEAR BUILT......................

OTHER......................................................................................................................



LAND REQUIREMENTS

BLOCK SIZE...................................

GARDENS....................................... GROUND IMPS...............................

VIEW/ASPECT................................ .......................................................

OTHER........................................................................................................................
.....................................................................................................................................



The above questions are the variables or fields in the database. A similar type of checklist can be constructed for potential tenants. Once such enquires are entered in the database you have very valuable information with the potential of telling you:


When a new property is listed, its description can be immediately matched against potential buyers or tenants using Access commands. Or a simple Search and Sort can be carried out that shows a list with the potential buyers or tenants at the start of the list. The list can also be used to following up to find out whether or not the prospect is still interested in buying or may have changed his/her requirements. This is good public relations (PR) and will increase the quality of service and goodwill of the agency.


EXERCISE

Interview your local and friendly real estate investor and ascertain from him/her the procedure or system that use to overcome potential liability problems when carrying out the appraisal of real estate for potential client. Is an appraisal a valuation?


ESTABLISH AND MAINTAIN A PERSONAL REFERRAL NETWORK

Networking is important part of real estate agency practice. The investor will develop and find contacts over a period of time of key personnel who can advise him/her of prospects. For example, the personnel office for a government department that has a large number of floating staff may be a good contact for potential tenants. Again, an Access database is invaluable for keeping control and updating such personal contacts.

Of course it is not essential to use a computer database program. Almost all that has been covered above can be achieved with other methods such as a card file. For a small agency, a card file may be the most economical method. However, for a large agency only a computer database program is able to quickly match, search or sort the 20-30 variables used in the database. This is the power of a database program such as Access.


EXERCISE

Make a list of all your acquaintances at both a professional(industry) and personal levels. Draw arrows between the two groups is interrelated in any way.

PROMOTE A POSITIVE IMAGE OF THE AGENCY

All of the above methods of research, analyses, use of databases and the writing of professional research reports using such data will promote a positive image of your agency. The positive image comes about in 3 ways:





ASSESSMENT

Carry out a research report applicable for the house that you live in. The report should use the research methods described above but assume that your target market knows nothing about your city or town. You should include as least 3 suitable maps. Support your report with appropriate research data such as that provided by the REIA. Do not hesitate to ask your local and friendly real estate investors for help.





CONCLUSION

Proper research and analysis of the real estate market is the base for good real estate management and the construction of a business plan. It is an example of where good pre planning can pay dividends later on. In today’s competitive market it is imperative that the investor be able to not only utilize existing research produced by a number of bodies (secondary data) but also and probably more importantly, be able to analyze and use the data and information available in his/her own business. The importance of research is shown by the expansion of the research departments in the major real estate companies.


GLOSSARY


CADASTRAL MAP

A map that shows manmade features particularly, lots and blocks.

DISTRICT SHOPPING CENTRE

Smaller than a Regional Shopping Centre serving about 100 000 people.

MULTIPLE REGRESSION ANALYSIS

A statistical method where a model can be constructed of the dependent variable (for example, market value) from a number of independent variables (for example, lot size, architectural style, age of improvements).

NEIGHBOURHOOD SHOPPING CENTRE

Smaller than the district centre, serving about 25 000 - 50 000 people.

PRIMARY TRADE AREA

The “safe” trade area. The population within walking distance of the shopping centre.

REGIONAL SHOPPING CENTRE

The largest of the planned shopping centres serving populations of up to 500 000.

SECONDARY TRADE AREA

The shopper catchment outside the primary trade area. Those shoppers within 10-30 minutes driving time of the centre. This market is riskier than the primary trade area.

TREND LINE

A statistical method using linear regression to construct of straight line of the data (“line of best fit”) from which future values can be predicted.

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