Overview of Auditing in Real Estate Industry
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Questions and Answers

What aspect of the property does the real estate industry NOT cover?

  • Management
  • Leasing
  • Construction of bridges (correct)
  • Appraisal

How have the pandemic and mobility restrictions affected high-end residential developments?

  • They have become more popular among buyers.
  • They have caused only minor disruptions.
  • They have weakened demand. (correct)
  • They have increased demand significantly.

What is a significant opportunity arising from the changes in work culture due to the pandemic?

  • Decline in the need for commercial properties.
  • Emergence of co-working spaces. (correct)
  • Increased demand for high-end residential units.
  • Return to traditional office spaces.

Which type of construction primarily involves small renovations such as room additions?

<p>Residential construction (D)</p> Signup and view all the answers

What effect has the pandemic had on the construction sector in the Philippines?

<p>It has delayed construction projects due to lockdowns. (B)</p> Signup and view all the answers

Which of the following is NOT a trend identified within the construction and real estate industry?

<p>Decline in the need for residential properties. (A)</p> Signup and view all the answers

What should agile real estate developers focus on to capitalize on emerging opportunities?

<p>Meeting the new normal requirements. (B)</p> Signup and view all the answers

Which of these is considered part of the construction industry?

<p>Bridge erection (C)</p> Signup and view all the answers

Which type of real estate would a strip mall fall under?

<p>Commercial (A)</p> Signup and view all the answers

What is a primary activity involved in real estate development?

<p>Purchasing raw land (C)</p> Signup and view all the answers

Which of the following is NOT a type of real estate mentioned?

<p>Retail (B)</p> Signup and view all the answers

What is one of the main purposes of sales and marketing firms in real estate?

<p>To sell newly created units (C)</p> Signup and view all the answers

Which statement best describes industrial real estate?

<p>Used for production and distribution of goods (B)</p> Signup and view all the answers

What is a role of a brokerage in the real estate industry?

<p>To employ real estate agents (C)</p> Signup and view all the answers

Which type of land is not considered a subtype of real estate?

<p>Single-family homes (A)</p> Signup and view all the answers

What is the primary goal of real estate developers?

<p>To create value from properties (A)</p> Signup and view all the answers

What is one significant driver for the growth of the real estate sector in the Philippines?

<p>Expansion of multinational companies (C)</p> Signup and view all the answers

Which of the following is considered a challenge facing real estate developers in the Philippines?

<p>Housing backlog in the market (A)</p> Signup and view all the answers

What opportunity does the real estate market in the Philippines present for investors?

<p>Direct investment in physical real estate (D)</p> Signup and view all the answers

How is urbanization affecting the real estate market in the Philippines?

<p>Growing the middle-class population with property purchasing power (C)</p> Signup and view all the answers

What is a concern that has limited the growth of the real estate market in the Philippines?

<p>Fear of a property bubble (D)</p> Signup and view all the answers

What is one of the primary roles of real estate agents?

<p>To represent buyers or sellers in transactions (A)</p> Signup and view all the answers

Which entities are considered lenders in real estate?

<p>Private lenders, banks, and government institutions (A)</p> Signup and view all the answers

What do property management firms primarily do?

<p>Collect rent and perform repairs on properties (D)</p> Signup and view all the answers

What is one example of a professional service in the real estate industry?

<p>Interior design (D)</p> Signup and view all the answers

Which government department manages the majority of infrastructure flagship projects in the Philippines?

<p>Department of Public Works and Highways (C)</p> Signup and view all the answers

What is a notable infrastructure project mentioned for completion in 2025?

<p>Metro Manila Subway Project (C)</p> Signup and view all the answers

How many infrastructure flagship projects were prepared by the public sector as of February 2020?

<p>100 projects (B)</p> Signup and view all the answers

What is the estimated cost of the Metro Manila Subway Project?

<p>357 billion Philippine pesos (D)</p> Signup and view all the answers

What was the approximate number of general engineering contractor permits issued in 2018?

<p>4.8 thousand (D)</p> Signup and view all the answers

Which business sector occupied the most office space in the National Capital Region?

<p>Philippine Offshore Gaming Operators (POGO) (B)</p> Signup and view all the answers

How many non-residential building permits were issued in 2018?

<p>24.4 thousand (B)</p> Signup and view all the answers

Which urban area had a higher supply of condominium units by the end of 2018?

<p>Fort Bonifacio (B)</p> Signup and view all the answers

What impact is urbanization expected to have on the Philippines real estate market by 2020?

<p>Increase in revenues (D)</p> Signup and view all the answers

The real estate market in the Philippines is expected to grow at an estimated CAGR from which years?

<p>2016 to 2021 (A)</p> Signup and view all the answers

What has significantly increased the number of building contractor licenses in the Philippines?

<p>Build Build Build program (C)</p> Signup and view all the answers

What is one major factor driving private construction in the Philippines?

<p>Income potential in real estate (B)</p> Signup and view all the answers

Flashcards

What is the real estate industry?

The real estate industry encompasses various facets of property, including development, leasing, appraisal, marketing, and management, covering commercial, residential, agricultural, and industrial properties.

Why is the real estate industry resilient?

Despite economic fluctuations, the real estate industry remains consistent due to the ongoing need for homes and commercial spaces.

What is the role of construction and real estate in economic recovery?

The construction and real estate industry is considered resilient, potentially aiding in national recovery.

What is the construction industry?

The construction industry encompasses a wide range of activities, including building, altering, and repairing structures and infrastructure.

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What is residential construction?

Residential construction involves the building or renovation of dwellings, including both large-scale projects and smaller renovations like adding a room or updating a kitchen.

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How did the pandemic impact the real estate industry?

The demand for office spaces and high-end residences was affected due to mobility restrictions imposed during the pandemic.

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What is a significant trend emerging in the real estate industry due to the pandemic?

Due to the pandemic, work-from-home practices increased, leading to the rise of co-working spaces as a solution for companies seeking flexibility and safety.

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What opportunity does the pandemic present for real estate developers?

Agile real estate developers have the opportunity to gain an advantage by creating projects that meet the evolving needs of tenants and buyers in the post-pandemic era.

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Real Estate Development

The process of buying raw land, rezoning it, renovating buildings, constructing new ones, and eventually selling or leasing the finished product to end users.

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Commercial Real Estate

This type of real estate includes buildings designed for commercial activity, such as retail stores, office buildings, shopping malls, hotels, and educational institutions.

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Land Real Estate

This category encompasses plots of land that may be vacant, used for ranching, or dedicated to agricultural activities.

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Residential Real Estate

Real estate that is primarily used for residential purposes, including single-family homes, multi-family units, condominiums, and townhouses.

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Industrial Real Estate

Real estate that includes buildings and properties associated with manufacturing, warehousing, and research activities.

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Real Estate Sales and Marketing Firm

A company that specializes in selling and marketing new real estate developments, working with developers to market and sell the finished units.

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Real Estate Brokerage

A business composed of real estate agents or realtors who help clients buy, sell, or rent properties.

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Apartment Real Estate

The category of real estate that specifically includes residential and commercial spaces designed as rentals for living purposes.

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What is the role of a real estate agent?

Professionals who facilitate the buying and selling of properties. They work on behalf of buyers or sellers to secure the best possible deal.

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What are real estate lenders?

These institutions, including banks, credit unions, and private lenders, provide funding for real estate purchases and developments.

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What is the function of a property management firm?

These firms manage rental properties on behalf of owners. Their responsibilities include collecting rent, maintaining the property, and managing tenants.

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Why is the construction sector important in the Philippines?

The government's focus on infrastructure development in the Philippines is a major driver for the construction sector.

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What is the Metro Manila Subway Project?

A key infrastructure project in the Philippines, the Metro Manila Subway project is expected to be completed in 2025, easing traffic congestion and improving connectivity.

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What are the goals of the North-South Commuter Railway extensions?

The project aims to create a modern and efficient rail system connecting various parts of the country. It involves several extensions and new lines.

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What is the purpose of the Bataan-Cavite Interlink Bridge?

This bridge aims to improve transportation and connectivity between Bataan and Cavite, two provinces in the Philippines.

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What is the goal of the Panay-Guimaras Negros Bridge project?

The project involves the construction of new bridges to improve connectivity between the islands of Panay, Guimaras, and Negros.

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What are the major drivers of the real estate sector in the Philippines?

The increase in the number of multinational companies and BPOs, urbanization, and real estate construction projects are driving the growth of the real estate sector in the Philippines.

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How is the growing middle class impacting the real estate sector?

The rising middle class in the Philippines, driven by economic growth and a shift towards urban lifestyles, is creating a significant demand for housing and commercial spaces.

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What is a major challenge facing the real estate sector in the Philippines?

The Philippines faces a housing backlog, requiring developers to address the need for affordable and accessible housing options.

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Why is real estate considered a good investment in the Philippines?

Investing in real estate in the Philippines is seen as a profitable venture due to the country's economic growth and increasing urbanization.

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What are the two main ways to invest in real estate?

Investors can choose between direct real estate investment, such as purchasing residential or commercial properties, or indirect investment through managed funds.

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What is the "Build Build Build" program?

"Build Build Build" program is a government initiative aiming to boost infrastructure development in the Philippines.

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How has the "Build Build Build" program impacted the construction industry?

The "Build Build Build" program has encouraged more Filipinos to become building contractors, leading to an increase in construction permits issued.

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How does the POGO industry impact the commercial real estate market?

The Philippine Offshore Gaming Operators (POGO) play a major role in the office space demand in the country.

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Where is the demand for condominiums higher in Metro Manila?

In the Philippines, the demand for condominium units is higher in urbanized districts like Fort Bonifacio, Makati, Bay area, and Ortigas Center compared to other areas.

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What factors drive the real estate market in the Philippines?

The Philippines' real estate market receives high investments from both domestic and international sources, indicating a favorable environment for growth.

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How is the real estate market in the Philippines expected to perform in the coming years?

The increasing urbanization and a surge in construction projects are driving the growth of the Philippines' real estate market, with projections of significant revenue by 2020.

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What is the projected growth rate of the Philippine real estate market?

The Philippines' real estate market is anticipated to grow at a steady pace, fueled by factors like urbanization, construction projects, and the increasing presence of multinational companies and BPOs.

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Why is the real estate market in the Philippines expected to grow?

The real estate market in the Philippines is poised for growth due to the increasing demand for residential and commercial spaces driven by various factors.

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Study Notes

Overview of Auditing Construction and Real Estate

  • The real estate industry encompasses development, leasing, appraisal, marketing, and management of various property types (commercial, residential, agricultural, industrial).
  • The industry's performance is influenced by economic cycles but consistently experiences demand for homes and commercial space.
  • The COVID-19 pandemic initially slowed the sector, but early indications suggest resilience, potentially acting as a platform for national recovery.
  • Increased remote work due to pandemic restrictions led to a shift in demand for co-working spaces as firms sought decentralized and safe operating environments.

Module Objectives

  • Understand the specific nature and background of the real estate industry.
  • Learn about the sector's overview, statistics, and updates, particularly in the Philippine context.
  • Identify crucial audit considerations and current trends relevant to the industry.

Nature and Background of Specialized Industry

Construction

  • Construction encompasses building, alteration, and repair activities, including residential (house renovations), commercial (office buildings), and various infrastructure projects.
  • Residential construction often involves smaller-scale renovations (bathrooms, kitchens).
  • Commercial construction encompasses diverse projects, including large-scale buildings, public facilities, and infrastructure like highways and bridges.

Real Estate

  • Real estate includes land and improvements, encompassing fixtures, buildings, roads, structures, and utility systems.
  • Four primary real estate types:
    • Residential (single-family homes, condos, co-ops, etc.)
    • Commercial (strip malls, offices, shopping centers)
    • Industrial (warehouses, manufacturing facilities with varied uses)
    • Land (vacant, undeveloped, under development)

How the Real Estate Industry Works

  • Development: Real estate development involves land purchase, zoning modifications, building construction, and eventual sale/lease to end users.

  • Sales and Marketing: Firms focusing on sales and marketing work with developers, assisting in creating and executing marketing strategies to sell completed units.

  • Brokerage: Real estate agents facilitate transactions between buyers and sellers, representing clients and guiding dealings.

  • Real Estate Lending: Lending institutions such as banks and government agencies play a crucial role in financing projects and transactions.

  • Property Management: Companies manage property for owners, including tasks like rent collection, repair management, tenant relations, and unit showcasing.

Overview, Updates, and Statistics

  • Government-led infrastructure initiatives (such as the "Build, Build, Build" program) are driving development in the Philippines.
  • Infrastructure projects like the Metro Manila Subway, PNR extensions, and other major connectivity enhancements are being or have been undertaken.
  • The "Build, Build, Build" program has increased permits for building contractors in the Philippines.
  • Business units like POGO (Philippine Offshore Gaming Operations) and IT companies contribute significantly to office space demand within specific urban areas (such as NCR).

Drivers

  • The rising number of multinational corporations and Business Process Outsourcing (BPOs) are boosting demand for commercial spaces.
  • Urbanization is contributing to real estate growth as more people move to urban areas.
  • The real estate market is increasingly attractive due to scale and scope, offering a diverse range of investment avenues and development opportunities.

Restraints and Challenges

  • Meeting increasing demand for housing, especially in growing urban areas.
  • Addressing the backlog in housing supplies.
  • Ensuring government investment in infrastructure.
  • Potential for real estate over-valuation and bubble formation (a persistent concern).

Opportunities

  • Real estate continues to be a favorable investment choice, driven by a large, active market.
  • Investing in physical or managed funds allows investors access to residential or commercial properties for income generation.
  • Developing economies, like the Philippines, consistently present growth opportunities due to urbanization and changing lifestyle preferences.

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MODULE 4: Auditing Construction & Real Estate Industry PDF

Description

This quiz provides an overview of the auditing processes within the real estate industry, highlighting key trends and statistics, particularly in the Philippine context. Understand the sector's dynamics, performance impacts, and current trends, such as the influence of remote work and the COVID-19 pandemic on demand for various property types.

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