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SWOT Analysis of Real Estate Sector

pestle-and-swot-analysis

STRENGTHS

  • It is an investment asset that increases in value over time.
  • It is less volatile (risky) than other investment assets particularly equities.
  • The owner of a real estate asset has full rights over the asset and can add value to it through refurbishment and good management.
  • It is used to hedge inflation risk and is a good store of wealth.
  • Preferred collateral/security by financial institutions.
  • There is no single market for real estate i.e. it can be traded at auctions or open markets by estate agents and surveyors.

WEAKNESSES

  • Ownership rights cannot be easily transferred.
  • It is a highly illiquid asset.
  • It requires a large capital to invest in.
  • Low supply.

OPPORTUNITIES

  • Global demand for real estate is strong and high.
  • Real estate is poised for rapid growth.
  • Potential to diversify into other sectors.
  • New sectors offer great potential i.e. student accommodation & care homes.

THREATS

  • Economic slowdown may affect demand i.e. periods of recession.
  • Competition from other investment asset classes such as equities and bonds.
  • Seasonal demand may affect prices
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