Analysis of the Commercial Property Industry in Zambia Using Michael Porter's Five Forces Model

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  • Topic: Real estate, Real estate development, Real property
  • Pages : 10 (1839 words )
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  • Published : March 15, 2013
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UNIVERSITY OF LUSAKA
SCHOOL OF BUSINESS

Business Environment (RE140) Assignment #:1
Student Name: Marleen Nakubiana Muttendango
Computer No: BRE1621005

Required: Use Michael Porter’s Five Forces model to analyse any Industry of your choice in Zambia

Due date: 20th September 2012
Lecturer: Mrs Mutere

1

CONTENTS

PAGE

1.0.

INTRODUCTION ...................................................................................................................... 3

2.0.

OVERVIEW ............................................................................................................................... 3

3.0.

INDUSTRY ANALYSIS ............................................................................................................ 4

3.1.

COMPETITIVE RIVALRY ............................................................................................... 4

3.2.

THREAT OF NEW ENTRANTS ........................................................................................... 4

3.3.

PRESSURE FROM SUBSTITUTE PRODUCTS .................................................................. 5

3.4.

BARGAINING POWER OF SUPPLIERS ............................................................................. 5

3.5.

BARGAINING POWER OF BUYERS ................................................................................. 6

4.0.

SUMMARY OF ANALYSIS ..................................................................................................... 7

5.0.

REFERENCES ........................................................................................................................... 8

2

1.0.

INTRODUCTION

Real estate development or property development is a multifaceted business, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of improved land or parcels to others. Developers are the coordinators of the activities, converting the ideas on paper into real property. Real estate is different from construction, although many developers also engage in construction activities. Developers buy land, finance real estate deals, build or have builders build projects, create, imagine, control and orchestrate the process of development from the beginning to end.

Commercial real estate is often commonly thought of as shopping centres, office buildings, a nd hotels. It also includes medical and educational buildings. It includes vacant land that will eventually be leased, or built upon for buildings to be leased. It is not residential real estate, which is property used to live in (Amadeo, 2012).

This paper will focus on the commercial property development industry in Zambia and will give some examples of the current players. Analysis of the profit potential of this industry will be done using the five forces model by Michael Porter below. The last part of this paper will be a summary of the analysis.

2.0.

OVERVIEW

Zambia over the last 10 years has experienced a surge in its real estate market. Demand for property has increased, causing a surge in property values. Therefore investments into real estate in Zambia, particularly commercial real estate, is now limited to Government, NAPSA and a select group of wealthy individuals and corporations.

A brief overview of the real estate market is given below through a feasibility study that was conducted by one of the leading international real estate companies in Zambia, Knight Frank (Z) Ltd, as follows:

There has been a steady change in the character and location of commercial areas in Lusaka over the past ten years. Whilst the Central Business District (CBD), centred on Cairo Road remains the largest commercial hub in the city, it is no longer the only commercial area. Decentralisation started with new retail centres such as Manda Hill and Arcades along Great East Road, and has been followed by office developments along new...
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