Page 29 - QUALITY MAGAZINE_Volume 02 (Issue II)_Web Ready File (1)
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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
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