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Real Estate Trend

Real estate trend is a generic term used to describe any consistent pattern or change in the general direction of the real estate industry, which must be based on fact and, over the course of time, causing a statistically noticeable pattern of change.

This phenomenon can be a result of the economy, a change in mortgage rates, consumer speculations or other fundamental and non-fundamental reasons. A trend can be downward or upward, horizontal or vertical depending on the series of related changes that are identified and projected into a plausible future. When such trends are based on rental values then the observation will be confined to any evident changes in rent patterns. Rents passing on properties are bound to be influenced variedly due to the heterogeneity of real estate. These factors range from intrinsic to extrinsic characteristics. They include closeness to high-rise office buildings, accessibility, location, size, structural characteristics, proximity to rail and park, provision of balconies, proximity to open space, location of dams, the situation of a new sport venue, distance from foreclosed properties, local historic designation, the impact of inflation and real construction cost in the long-run while in the short-run increase in wealth rising from equity price provision of wall-fence round the building and the installation of burglary proof in all the windows nearness to worship centres amongst others.

Specifically for commercial properties certain factors abound. Such factors include; average floor area and number of rooms, changes in floor space and prime lending rates, size of sales facility, neighborhood and physical characteristics.

From these backdrops these requisite factors have to be continually evident for properties to keep commanding attractive rents that will generate an impressive trend/pattern from the stance of investors over a given period of time. Rising rents have been described as an attraction for rental real estate development as prospect of rental growth is also an important viability consideration.

In addition rental growth rates combined with occupancy levels are being regarded as major long run determinants of property income.

Changes in rent invariably affect every type of real estate although in varying degrees. It appears that these changes are more evident in commercial properties. This perhaps is due to the fact that these properties are majorly built for business transactions and as the name implies could easily be prone to varying economic warp. Commercial property which could come in form of office space, malls, retail stores, shopping centers, banks amongst others has an important role in real estate markets. Its importance can be related to three different factors: First, as a factor of production, commercial property provides the space to house the activities of business and industry. Second, as a financial asset, commercial property constitutes a significant part within asset markets. Third, as an investment medium, it provides revenues to its holders based on value

These characteristics make commercial property attractive for investors. Hence, any painstaking process in monitoring rental movements over the years is worth the while.

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