Auditing Assurance: Specialized Industry

Real Estate Industry

Leaders:
Lendon Llagas
Shaina Camaganacan

Members:
Princess Aban
Angel Alpuerto
Marielle Castillo
Honey Evangelista
Desiree Dawn Gabales
Psyche Opanis
Jamaica Tabac
Carel Teatro

Instructor:
Mrs. Normal Arellano

Accounting 13: Auditing and Assurance: Specialized Industry

 Real Estate

Overview:
One successful business in the construction world is the real estate industry. This
industry covers many aspects of the property such as development, leasing, appraisal,
marketing, and management of commercial, residential, agricultural, and industrial
properties. The industry fluctuates depending on the economies but at the same time
remains consistent since people always need homes and businesses need commercial
space.

While Covid-19 has thrown the Philippines’ economy into flux, early indications
suggest that real estate is one of the most resilient sectors and could provide a platform
for national recovery. For instance, with the pandemic inducing a significant shift
towards working from home as companies adhere to social-distancing measures, co-
working spaces are emerging as a solution for firms seeking to decentralize while
ensuring a sound operating environment for employees. Agile real estate developers
have the chance to establish a first-mover advantage and capitalize on emerging
opportunities as tenants and buyers seek projects that meet the demands of the new
normal.

Real estate is any real property consisting of land and improvements such as fixtures
(i.e., access door, lighting, awnings, etc.), buildings, roads, structures, and even utility
systems.

Four types of real estate:

1. Residential - This includes both new construction and resale. A common category of
residential real estate is single-family homes. Other residential real estates include
condominiums, co-ops, townhouses, triple-deckers, high-value homes, duplexes, quad
lexes, vacation, and multi-generational homes.
2. Commercial - Included in this type of real estate are strip malls, shopping centers,
educational and medical buildings, hotels, and offices. Apartments, although used for
residences, are often considered commercial since they are owned to produce income.

3. Industrial - This kind of real estate includes manufacturing buildings and property,
including warehouses. There can be various uses for industrial buildings such as
research, production, distribution, and storage of goods. However, buildings where
goods are distributed, are considered as commercial real estate

4. Land - Land can either mean vacant land, ranches, or working farms. Subcategories
of this kind of real estate include undeveloped, early development or reuse,
subdivisions, and site assembly.

How the Real Industry Works?

1. Development

Real estate development is the process of purchasing raw land, rezoning, renovation
and construction of buildings, as well as sale or lease of finished products to end-users.
Real estate developers end profit by adding value to the land such as creating buildings
or improvements or rezoning and taking a risk in financing a project.

2. Sales and Marketing

Firms that focus primarily on sales and marketing work with developers to sell buildings
and units that they create. Commissions are earned by these firms for creating all
marketing material and using sales agents to sell completed units. Sales and marketing
firms focus more on new units.

3. Brokerage
A brokerage is a firm with a team of real estate agents or realtors as employees. The
real estate agents help in facilitating a transaction between buyers and sellers of
property. One of their jobs is to represent either party and help them achieve the
purchase or sale with the best possible team.

4. Real Estate Lending

Lenders include banks, private lenders, credit unions, and government institutions. They
play a huge role in the real estate industry since all properties and developments use
debts to finance their business.

5. Property Management

Property management firms play a role in helping real estate owners rent out the units
in their buildings. Some of their jobs include collecting rent, fixing deficiencies,
performing repairs, showing units, and managing the tenants. They charge a fee which
is a percentage of the rent to property owners.

6. Professional services

There are a variety of real estate professionals who work in the industry and help make
it function. The most common examples (other than the ones listed above) are
accountants, lawyers, interior designers, stagers, general contractors, construction
workers, and tradespeople.

Overview, Updates, Statistics of the Specialized Industry in the Philippines

In terms of residential units' supply, the number of condominium units within the major
districts of Metro Manila have shown a different kind of appetite on property
investments. At the end of 2018, the supply of condominium units among the highly
urbanized cities of Fort Bonifacio, Makati, Bay area, and the Ortigas Center were higher
compared to Alabang, Araneta Center and Rockwell Center.
The Philippines real estate market has been penetrated with high investments arising
from the presence of both, domestic and international players, in the market. The
Philippines real estate market is expected to post revenues of USD XX billion by 2020
due to the increasing urbanization and expansion in the real estate construction
projects. The demand is expected to rise due to growth in the number of multinational
companies and a number of BPO’s. The real estate market in Philippines is poised for
growth at an estimated CAGR of XX.X% over the forecast period, from 2016 to 2021.

Reference:

https://pdfcoffee.com/qdownload/instructional-material-acco-30073-audit-of-specialized-
industries-2021-pdf-free.html