Property Value Drivers
FRAMEWORK AND THE VALUE DRIVERS FOR REAL ESTATE DEVELOPMENT: APPLICABILITY OF THEORETICAL MODELS WITH SPECIAL REFERENCE TO TANZANIA Sophia Marcian Kongela; International Real Estate Business School (IREBS)-Regensburg University Email: Sophia.Kongela@stud.uni-regensburg.de OR kongelasophia@gmail.com
Tanzania Bureau of Standards (TBS). The study had eight sets of interview
Introduction
The real estate sector in Tanzania is currently still underdeveloped. Over many years, the sector has had marginal contribution to the country’s GDP. However, despite its low share of GDP, real estate sector is regarded to have great potential to attract more investments following the institutional reforms. Although the last two decades of economic reforms have witnessed a sharp increase in commercial real estate development projects in major cities, this study considers that the sector is not growing at the pace that is practically and economically justified. The study presupposes that, there are some value drivers for real estate development which are yet to be exploited to realise the full potential of the sector and to enhance its attractiveness to both local and foreign investors. This reasoning takes note of Porter’s point of view which emphasises that the essence of the decision is often not the financial benefits of the alternatives but strategic issues that are hard to quantify. This study is set out to assess the real estate sector in the context of two theoretical models (i.e. diamond models). The first model was developed by Michael Porter, and the second model was developed by Poorvu and Cruikshank. The two models are used in this study to assess the real estate market framework and the potential driving forces for the sector growth. The general objectives of this study is first, to explore the key existing and potential driving forces which could stimulate real estate development in Tanzania and of which property developers should be conscious when making property
Tanzania Bureau of Standards (TBS). The study had eight sets of interview
Introduction
The real estate sector in Tanzania is currently still underdeveloped. Over many years, the sector has had marginal contribution to the country’s GDP. However, despite its low share of GDP, real estate sector is regarded to have great potential to attract more investments following the institutional reforms. Although the last two decades of economic reforms have witnessed a sharp increase in commercial real estate development projects in major cities, this study considers that the sector is not growing at the pace that is practically and economically justified. The study presupposes that, there are some value drivers for real estate development which are yet to be exploited to realise the full potential of the sector and to enhance its attractiveness to both local and foreign investors. This reasoning takes note of Porter’s point of view which emphasises that the essence of the decision is often not the financial benefits of the alternatives but strategic issues that are hard to quantify. This study is set out to assess the real estate sector in the context of two theoretical models (i.e. diamond models). The first model was developed by Michael Porter, and the second model was developed by Poorvu and Cruikshank. The two models are used in this study to assess the real estate market framework and the potential driving forces for the sector growth. The general objectives of this study is first, to explore the key existing and potential driving forces which could stimulate real estate development in Tanzania and of which property developers should be conscious when making property