Page 28 - QUALITY MAGAZINE_Volume 02 (Issue II)_Web Ready File (1)

QUALIT Y JANUARY 2024

Real estate transactions stimulate other sectors, Then next, who owns this two third In summary, real estate ownership spans across various
and commercial developments attract businesses, 4 of global net worth or real estate, segments, each playing a crucial role in the economic
generating employment and boosting local economies. 3 What is the importance of real and what segments hold the most and social fabric of our society. This widespread
Secondly, real estate also has a significant social impact. estate as a wealth accumulator? significant portions? ownership and the significant value tied to real estate
It provides essential housing, affecting the health, underscore why it remains a vital topic for discussion.
safety, and well-being of individuals and families. Real To illustrate the significance of real estate as a wealth Real estate ownership can be categorized into four
estate development creates vibrant communities with accumulator, let’s look at some global research main segments: companies, financial institutions,
spaces for living, working, and recreation. It also plays a statistics. According to Savills Research, property governments, and households. According to McKinsey
in 2020, residential real estate, including land,
crucial role in creating social infrastructure like schools, remains the world’s biggest store of wealth. The and government buildings and associated land 8
hospitals, parks, and community centers, enhancing McKinsey Global Institute reports that by 2020, the accounted for 46% of global net worth, while corporate What does "Real Estate Literacy"
the quality of life and promoting social cohesion. world’s assets totaled $1,540 trillion, equating to 18.1 mean?
As per UNEP 2022, the built environment is responsible times GDP. Out of these assets, two-thirds are financial represented an additional 23%. This highlights the vital Real estate literacy refers to the understanding of
assets like stocks, bonds, and currency. However, at a
importance of real estate to individuals, corporations,
for almost 40% of global carbon emissions, including global level, financial assets and liabilities net to zero. and governments alike. Thus, the importance of the fundamental principles and practices involved in
buildings and infrastructure assets, and embodied and knowledge that required even for individuals. buying, selling, and managing property. It encompasses
operational carbon. Therefore, sustainable building The remaining one-third, valued at $520 trillion, knowledge of property valuation, market trends, legal
practices and eco-friendly developments reduce carbon comprises real assets such as real estate, machinery, aspects, and investment strategies. There are several
footprints and promote environmental stewardship. minerals, and intangibles. Real estate makes up two- key components of real estate knowledge that are
Effective land use planning preserves green spaces thirds of these real assets, underscoring its critical role Let's break it down further. crucial for anyone involved in the real estate market.
and protects ecosystems. Using renewable energy, in global wealth accumulation. 5
efficient water management, waste reduction, and These statistics highlight the gravity of the topic we’re How does real estate ownership
green building materials not only lower environmental discussing-real estate, which constitutes two-thirds of impact individuals?
impact but also reduce operating costs, increase the global net worth. This immense value underscores At the individual level, real estate often constitutes 9
property value, and enhance resilience against climate why real estate is such a vital component of wealth the largest portion of personal wealth. For families, What are the key components of
change. accumulation and economic stability worldwide. homeownership is a critical component of financial real estate knowledge?
security and generational wealth transfer. Owning a Let’s break down the key components:
home not only provides shelter but also serves as a
long-term investment that can appreciate over time, Property Valuation: The value of a property is
offering financial stability and an asset to pass on to influenced by various factors, including location, size,
future generations. condition, and market conditions. Understanding how
these factors interplay can help individuals assess
whether a property is priced fairly and make better
investment decisions. Accurate property valuation is
6 essential for buyers, sellers, and investors to ensure
they are making informed and financially sound
decisions.
How about the corporate level?
Market Trends: Staying updated with market trends
At the corporate level, companies invest in real estate is crucial. This includes understanding supply and
to diversify their portfolios and secure operational demand dynamics, economic indicators, and local real
spaces. Real estate investments provide a stable estate developments. Market trends can significantly
income through rentals and can appreciate over impact property values and investment returns. Being
time, enhancing the company’s overall asset base. aware of these trends helps individuals and businesses
Additionally, owning real estate can reduce operational anticipate changes in the market, allowing them to
costs and offer strategic advantages in terms of location make strategic decisions about buying, selling, or
and infrastructure. holding properties.

Legal Aspects: Real estate transactions involve various
legal considerations, such as property rights, zoning
7 And what role does real estate play to navigate these complexities and ensure smooth
laws, and contracts. Basic legal knowledge is essential

transactions. Understanding legal aspects helps
for governments?
and protects the interests of all parties involved in real
Governments leverage real estate for public prevent disputes, ensures compliance with regulations,
infrastructure and as a significant source of revenue estate transactions.
through property taxes. Public buildings, roads, parks,
and other infrastructure projects are all part of the In essence, real estate literacy empowers individuals
government’s real estate assets. By managing and and businesses to make informed decisions, mitigate
investing in real estate, governments can support risks, and maximize the benefits of their real estate
community development, provide essential services, investments. This knowledge is fundamental to
and generate revenue that funds public services and achieving financial stability and success in the real
initiatives. estate market.
Department of Industrial Quality Management
Department of Industrial Quality Management
26 Department of Industrial Quality Management Department of Industrial Quality Management 27
General Sir John Kotelawala Defence University General Sir John Kotelawala Defence University