THE IMPORTANCE OF RESEARCH

Understanding the Importance of Research in Creating a Sustainable Real Estate Market.

Underestimating the key role that research plays leads to a “supply-push” driven market where developers build projects based on aspiration and a desire for prestige above the requirements of actual demand. While this can result in some success in overheating economies, as was the case in Mongolia from 2011 to 2013, it also means that when there is a downturn or when the market reaches a saturation point, “ghost developments” become the norm. While this may be just retribution to reckless and amateur developers, such mistakes often have far reaching impacts on the banking sector as well as on the innocent consumers that assume that developers have carried out adequate research and have done thorough financial planning.

A key area where M.A.D. Investment Solutions has invested its resources is in assisting local property developers in understanding the process of the market research that is required for a real estate development. It is generally accepted that market research for developers should constitute approximately 5% of the total cost of development and should be carried out prior to purchasing land or making significant investments in the development.