Question

Real estate Finance

1. When we discussed the Space Market, also known as the Rental Market, we said rent is determined by the supply and demand dynamics of the space. What are the demand and supply drivers in the rental market? How does segmentation affect rental prices for physically similar space?

2.When the quantity of space demanded equals the quantity supplied, the market is said to have reached ­­­­­­­­­­­­­­______________________________ (fill in the blank)

Answer 1

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Question:

1). Answer:

Space Market, also known as the Rental Market, we said rent is determined by the supply and demand dynamics of the space. The factors derive supply and demand in the rental market are following as:-

1). Economic Growth:

When the economy is in boom phase or fast growing phase, the demand in space market increase rapidly. Increasing demand increase price level that increase supply also. In the recessionary phase the situation is toatally opposite that decrease demand and price decrease rapidly.

2). Interest Rate:

When interest rate is low its increase demand and increasind demand increase price level. So, increasing price level and low interest rate encourage producers to produce more that increase supply also. But when interest rate is high then its negatively affect the demand and supply both.

3). Availability of Loan:

When interest rate is low but banking and NBFC is not developed and efficient then its negatively affect the demand and supply both and vice-versa.

4). Government Policy:

When the government focus an housing market and work for affordability of housing for every section of the society then its spread positivity in the market and its positively affect the demand and supply in hosing market. When the government provide supsidy and other benefits then its increase supply and demand in the rent market. A affordable house support to demand and demand increase.

5). Number of Population:

When number of hoseholds or population increase and income level of people increase then its increase demand and increasing demand increase price level. Increasing price level increase supply also.

There are many segments in space market - residential , commercial, industrial . The rental prices in different segments are different. The rental prices of commercial & industrial segments are comparatively more than residential. The rental prices decide by the ROI, and need. The ROI of  commercial & industrial segments are comparatively more than residential.

2). Answer:

When the quantity of space demanded equals the quantity supplied, the market is said to have reached ­­­­­­­­­­­­­­__Equilibrium__.

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