Do Huu Luat

luat.do@luatdo.com
• The property and asset markets
• The operation of property market: A micro and
macro approach.
➢Assets: whatever can be owned.
• Tangible assets: land, car, clothe, buildings
• Intangible assets: non-physical, rights
➢Real estate is a name given to land,
buildings, and legal rights over immovable
property.
➢Real estate is the national stock of
buildings, the land on which they are built,
and all vacant land.
➢Real estate may be leased or owner-
occupied.
➢Residential real estate is property intended for
human habitation by a single-family or multiple
families.
➢Commercial real estate has a business use and
focus. This property type includes office buildings,
malls, restaurants, and other such activities.
➢Industrial real estate is a subdivision of
commercial real estate and includes property
where manufacturing, warehousing, production,
and assembly take place.
➢Durability
➢Heterogeneity
➢High transaction costs
➢Long time delay
➢Both an investment good and a consumption good
➢Immobility
➢Dependence
 LAND AREA 2019 POPULATION BY AREAS
Farming Non-farming Unuse Urban Rural

6%

12%
30%

70%

82%
 NET-MIGRATION RATE BY PROVINCE (%)
Bình Dương Đồng Nai Bà Rịa - Vũng Tàu TP. Hồ Chí Minh Hà Nội Long An Cần Thơ

45

35

25

15

2015 2016 2017 2018 2019

-5
 Cơ cấu lao động từ 15 tuổi trở lên đang Số lao động từ 15 tuổi hoạt động
làm việc trong nền kinh tế đă qua đào tạo kinh doanh bất động sản giai đoạn
phân theo ngành kinh tế 2010-2018 (nghìn người)
300
266.8
Nông nghiệp. lâm nghiệp
và thủy sản
250
226.1
Công nghiệp chế biến. chế
22.5 tạo
200
179.5
37.7 Bán buôn và bán lẻ; sửa 165.7
chữa ô tô. mô tô. xe máy 158.1
0.5 148.1 150
và xe có động cơ khác
150
7.9 Xây dựng
119
101.3
13.5 Hoạt động kinh doanh bất 100
động sản
17.9
Ngành khác
50

0
2010 2011 2012 2013 2014 2015 2016 2017 2018
 GDP BY ECONOMIC SECTORS AT CONSTANT
2010 PRICES
Agriculture, forestry and fishing Industry and construction
Service Products taxes less subsidies on products

11% 14%

39% 36%
➢Construction: 4.51% of GDP
➢Real estate activities: 5.94% of GDP
➢The study of how people allocate scarce
resources for production, distribution, and
consumption,
• Individually
• Collectively.
➢Scarcity: While land isn't considered rare, the total
supply is fixed.
➢Improvements: Any additions or changes to the
land or a building that affects the property's value
is called an improvement.
➢Permanence of investment: Once land is improved,
the total capital and labor used to build the
improvement represent a sizable fixed investment.
➢Location or area preference. Location refers to
people's choices and tastes regarding a given area,
based on factors like convenience, reputation, and
history.
Source: www.investopedia.com
➢Real estate economics is the application of
economic techniques to real estate markets.
➢Real estate markets are to promote voluntary
transactions relating to "land, houses, buildings,
and other land-attached assets".
• Markets include all transactions relating to the rights
and benefits from the real estate such as land, houses,
commercial centres, factories, retail leasing.
• Commodities on this market are houses, constructions,
land use rights, construction works, house and land
rental activities.
• Buyers and sellers can meet each other directly or
through intermediaries.
• Affiliate platform between buyers and sellers through
brokerage firms, technology companies
• Real estate prices / rents are formed in the market
➢Classification by transaction types
• Buy and sell market
• Rental market
• Mortgage and insurance markets
➢Classification by real estate development
• Market level I (Land market): transfer,
assignment or lease of land use rights
• Market level II: The market for buying, selling
and leasing for the first time
• Market level III: The market for sale, purchase,
and sublease
➢Buying and selling of rights contained in
the property, not just real estate
➢Localized
➢Uncertainty
➢Lack of competition
➢Price is exchange value
➢Real estate value
➢Investment value
➢Usage value
➢Mortgage value
➢Insurance value
➢The markets for real estate assets
➢The markets for real estate use (i.e. the
property market)
➢Expected income, cash flow in the future
➢Other assets, e.g. bond, stock
➢The market for real estate assets is only
interested in financial capital (money).
➢The market for real estate use is only
interested in physical capital (housing,
land): location, size, design, quality
➢The price of real estate asset depends on
• Capitalization rate
• Annual net income
➢The market is that people can buy/sell/rent
rights for space use.
➢Characteristics
• Immobile
• Diversity
• Local market
• High transaction costs
➢Subjects
• Demand: companies/consumers
• Supply: construction/developers/business
• Parameters: Constants that reflect underlying
behavior, α, β, δ.
• Endogenous variables: values that the model
determines: C, S, R, P.
• Exogenous variables: values that determine the
model’s variables, but which the model’s variables in
turn do not influence: i, E.
• Equilibrium: Solution to the endogenous variables
given exogenous values and parameters.
• Comparative Statics: How changes in exogenous
variables change equilibrium endogenous ones.
➢ Office Demand = 𝛼1 𝐸𝑅𝛽1
• E= office employment
• R = rent per square foot
• 𝛽1 = rental elasticity of demand, %change in sqft
per worker/% change in rent]
• 𝛼1 = sq.ft / E when R=$1
➢Demand = Stock = S
𝑆 −1/𝛽
➢Hence: R = ( ) 1
𝛼1 𝐸
=> downward sloping schedule
➢P = R/i
• i = all inclusive cap rate
➢Office Construction rate:
• C/S = 𝛼2 𝑃𝛽2
• P = Asset Price per square foot
• 𝛽2 = Price elasticity of supply: % change in
construction rate/% change in price
➢Replacement version (graph):
• E= fixed
• δS = building losses
• ΔS/S = C/S - δ [Construction rate – loss rate equals
net additions = 0 in equilibrium]
➢Steady Demand growth version:
• ΔE/E = δ, no losses
• Hence: ΔS/S - ΔE/E = C/S - δ
➢Fiscal and monetary policy
➢Publicly assisted housing
• Social houses
• Interest rate
• The study of the use, development, or pricing of
individual properties or parcels of land involves
a microeconomic approach
• The study of the behavior of the overall market
aggregating across individual properties
involves using a more macroeconomic approach
➢The prices of individual properties or land
parcels vary widely and systematically with
the physical or location characteristics of
the properties.
➢The relative prices of different properties
remain very stable over time and change
little as the overall market undergoes either
cyclic fluctuation or long-term growth.
➢The relative price of a parcel tends to
change mainly when the characteristics of
that parcel are altered.
➢The macro approach examines how broad
economic forces such as growth or decline in
a metropolitan area’s economy influence the
area’s real estate market.
➢Metropolitan growth is determined by
growth in the national economy as well as
the area’s industrial mix and
competitiveness.
If you have any questions, please contact me at
luat.do@luatdo.com