Property Demand Segmentation1. Tenure Type There are two major property tenure types: a) Rental occupancy There are significant differences between these two types of occupancy in terms of financial obligations and benefits resulting in a clear property demand segmentation along these two tenure types. There is also strong substitutability between the two occupancy modes as those that do not afford to buy a house for owner-occupancy will either have to find space to rent or stay for free with relatives if that is possible. For example, retail space is demanded by firms engaged in retail operations while office space is demanded mostly by firms mostly in the service sector, as well as the finance and real estate sector.
1. Residential There is very little substitutability, if any, between these major property types. For example, office space using firms will rarely use retail space or vice versa. For example, housing demand can be segmented into demand for luxury housing sought by high income households, medium-quality housing demanded by middle income households and low-quality housing that is demanded by low-income households. Substitutability across these segments is effectively impossible due to income constraints. For example, in the residential market the residence/workplace link prohibits individuals employed in one city to demand residence in another city unless it is reasonably close so as to allow reasonable commuting times. Understanding property demand segmentation across locations is very important in correctly defining market geographic boundaries when carrying out market analysis for a particular project.
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