Real estate is booming worldwide and, along with it, market research and analysis.

IMARC Group estimates the global housing market to value at $7,806 billion by 2027 and exhibit a CAGR of 1.9% between 2022 and 2027. For real estate investors, developers, consultants, buyers and sellers to minimise risk and maximise opportunity during that time, they need to know and understand their local markets.

Market reports are about more than just hard data; it’s the interpretation of that data that can make—or break—a decision. About 80% of real estate firms are still not making data-based decisions, and only about 5% of firms have a data-driven expert leading their transformation efforts. Many professionals are still figuring out how to utilise market data.   

Making conclusions based on data is more an art than a science, but that shouldn’t scare you away: a market analysis, when done right, can be vital to shaping your real estate investment strategies. Whether you’re thinking of performing your own analysis or bringing in an expert, here’s what you need to know to get started.

What’s a real estate market analysis?

A real estate market analysis is based on the information you need. For example, it can be:

• A look at the supply/demand of luxury properties in a specific region

• The creation of customer personas who purchase a specific type of investment property

• Looking at the price of properties over time and forecasting growth in a specific niche

• Comparing various properties to analyse the best option for future investment

Why should you do a market analysis?

There are a lot of reasons for doing a market analysis. It can:

• Provide input during project planning 

• Provide input for financial feasibility studies

• Demonstrate the potential for a new location

• Reveal what customers want

• Attract investment

• Provide input on developing a community or housing complex

How does market analysis fit into real estate development projects? 

Real estate developers don’t go into new projects with their eyes closed. Their decision on a location or type of business is based on consumer interest, competitor advantage and the likelihood of a greater return on investment. 

A feasibility study gathers all this information, which is helpful in uncovering any potential problems, determining if a project is worth the investment and driving business, luxury real estate marketing, and sales strategies.

How does market analysis fit into real estate investing?

Market analysis isn’t just part of real estate investing—it’s the most important part. Researching and understanding the market is crucial, and that information will form every decision that follows. 

Who uses market analysis?

Real estate developers, government officials, investors, lenders, tenants and buyers are among those who use market analysis to make decisions.

How do you analyse a property? 

There are different ways to analyse a property. For investment or purchase, for example, you can take a top-down approach by looking at the market, neighbourhood and then property level. You should be comparing neighbourhoods and cities, for example, and looking at things like average days on the market, inventory levels, average home age, the average sold price per square foot and list-to-sale price. Eventually, you’ll need to assess the property and the situation since homes in the same area could vary widely in their investment appeal depending on the circumstances. 

What are the steps for an effective real estate market analysis report?

Real estate is booming worldwide and, along with it, market research and analysis.

IMARC Group estimates the global housing market to value at $7,806 billion by 2027 and exhibit a CAGR of 1.9% between 2022 and 2027. For real estate investors, developers, consultants, buyers and sellers to minimise risk and maximise opportunity during that time, they need to know and understand their local markets.

Market reports are about more than just hard data; it’s the interpretation of that data that can make—or break—a decision. About 80% of real estate firms are still not making data-based decisions, and only about 5% of firms have a data-driven expert leading their transformation efforts. Many professionals are still figuring out how to utilise market data.   

Making conclusions based on data is more an art than a science, but that shouldn’t scare you away: a market analysis, when done right, can be vital to shaping your real estate investment strategies. Whether you’re thinking of performing your own analysis or bringing in an expert, here’s what you need to know to get started.

What’s a real estate market analysis?

A real estate market analysis is based on the information you need. For example, it can be:

• A look at the supply/demand of luxury properties in a specific region

• The creation of customer personas who purchase a specific type of investment property

• Looking at the price of properties over time and forecasting growth in a specific niche

• Comparing various properties to analyse the best option for future investment

Why should you do a market analysis?

There are a lot of reasons for doing a market analysis. It can:

• Provide input during project planning 

• Provide input for financial feasibility studies

• Demonstrate the potential for a new location

• Reveal what customers want

• Attract investment

• Provide input on developing a community or housing complex

How does market analysis fit into real estate development projects? 

Real estate developers don’t go into new projects with their eyes closed. Their decision on a location or type of business is based on consumer interest, competitor advantage and the likelihood of a greater return on investment. 

A feasibility study gathers all this information, which is helpful in uncovering any potential problems, determining if a project is worth the investment and driving business, marketing, and sales strategies.

How does market analysis fit into real estate investing?

Market analysis isn’t just part of real estate investing—it’s the most important part. Researching and understanding the market is crucial, and that information will form every decision that follows. 

Who uses market analysis?

Real estate developers, government officials, investors, lenders, tenants and buyers are among those who use market analysis to make decisions.

How do you analyse a property? 

There are different ways to analyse a property. For investment or purchase, for example, you can take a top-down approach by looking at the market, neighbourhood and then property level. You should be comparing neighbourhoods and cities, for example, and looking at things like average days on the market, inventory levels, average home age, the average sold price per square foot and list-to-sale price. Eventually, you’ll need to assess the property and the situation since homes in the same area could vary widely in their investment appeal depending on the circumstances. 

What are the steps for an effective real estate market analysis report?

1. Identify market trends

Compare properties with similar features, locations and types to determine a price range or listing price. Use data published from reliable sources like the Housing Price Index (HPI), or look for state- or city-level info. The UK HPI, for example, captures changes in the value of residential properties and uses sales data collected on residential housing transactions, whether for cash or with a mortgage.

Market trend information can be used to advise potential sellers on the achievable selling price of their property, assess the number of people in housing need and whether to purchase or build property to meet that need and assess whether and where demand for new housing exists.

2. Supply and demand

To determine supply and demand, we can look at building permits, housing starts and new home sales data. Building permits predict the number of new housing starts, new housing starts predict the amount of new home sales and then the cycle repeats. This info is published monthly in the US and offers reliable parameters for predicting housing market health.

3. Pricing 

You can analyse the price of real estate properties by first researching the median price in the cities where you want to invest. You can then do an analysis based on the quality of construction, amenities offered, desirability of the neighbourhood, location and more.

4. Legal requirements

Study and verify the documents pertaining to the property itself including: 

• Title documents 

• Nature of the title. Is the property on lease, freehold, or does it have development rights?

• The identity of the seller

• Land use permissions

• Construction approvals

• Status of tax payments

• Compliance with real estate regulations

If you’re entering into a new international market, make sure you understand the laws around real estate ownership. For developers, make sure development is permitted.

5. Data collection

All the steps we already mentioned will only work if data is collected properly. You can use data (demographic, geographic and unstructured data such as video and images) to determine the age and condition of a building and get reliable information on the types of renovations and redesigns done. When it comes to where to collect data, we recommend government-published sources. 

6. Reporting

Once you present all your data to investors, developers, buyers and sellers, they can analyse it and use that to make decisions. However, raw data can be hard to interpret, so we suggest working with an analysis expert. 

How can Proven Partners help?

Based on years of international real estate development experience, we deliver the expertise, guidance, and insight needed to deliver a comprehensive market analysis needed to attract key investors and move forward with your business plan. If you’re looking to determine the viability of your hotel project, raise capital or restructure, book some time to speak with us today.