ABSTRACT

This chapter examines concepts relating to property cycles and informs the property developer about the underlying theory behind property cycle behaviour. In general, property cycles can be defined as: Processes which repeat themselves in regular fashion. The underlying nature of the property market, the behaviour of the stakeholders and the process of property development collectively provides an ideal environment to support the existence of property cycles. The starting point here is to consider both the limited supply of land and also the level and type of demand. In comparison to property and real estate, other competing assets in investment market are usually divisible into smaller components. This applies to cash, equities and other mediums. As many property developments and investments are closely linked to economic and business frameworks, there is usually an observed relationship between property cycles and business cycles. It is widely accepted that upturns and downturns in property values are regular and unavoidable events in real estate markets.