Overview of Auditing in Real Estate Industry

Podcast

Play an AI-generated podcast conversation about this lesson

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?

Residential construction Signup and view all the answers

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

It has delayed construction projects due to lockdowns. Signup and view all the answers

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

Decline in the need for residential properties. Signup and view all the answers

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

Meeting the new normal requirements. Signup and view all the answers

Which of these is considered part of the construction industry?

Bridge erection Signup and view all the answers

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

Commercial Signup and view all the answers

What is a primary activity involved in real estate development?

Purchasing raw land Signup and view all the answers

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

Retail Signup and view all the answers

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

To sell newly created units Signup and view all the answers

Which statement best describes industrial real estate?

Used for production and distribution of goods Signup and view all the answers

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

To employ real estate agents Signup and view all the answers

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

Single-family homes Signup and view all the answers

What is the primary goal of real estate developers?

To create value from properties Signup and view all the answers

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

Expansion of multinational companies Signup and view all the answers

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

Housing backlog in the market Signup and view all the answers

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

Direct investment in physical real estate Signup and view all the answers

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

Growing the middle-class population with property purchasing power Signup and view all the answers

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

Fear of a property bubble Signup and view all the answers

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

To represent buyers or sellers in transactions Signup and view all the answers

Which entities are considered lenders in real estate?

Private lenders, banks, and government institutions Signup and view all the answers

What do property management firms primarily do?

Collect rent and perform repairs on properties Signup and view all the answers

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

Interior design Signup and view all the answers

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

Department of Public Works and Highways Signup and view all the answers

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

Metro Manila Subway Project Signup and view all the answers

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

100 projects Signup and view all the answers

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

357 billion Philippine pesos Signup and view all the answers

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

4.8 thousand Signup and view all the answers

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

Philippine Offshore Gaming Operators (POGO) Signup and view all the answers

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

24.4 thousand Signup and view all the answers

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

Fort Bonifacio Signup and view all the answers

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

Increase in revenues Signup and view all the answers

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

2016 to 2021 Signup and view all the answers

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

Build Build Build program Signup and view all the answers

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

Income potential in real estate Signup and view all the answers

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.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

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.