In the past, Sri Lanka failed to secure development opportunities due to civil war unrest; however, post war development has kicked in and the country is experiencing the development of the construction industry in several contexts. The growth of the economy is directly linked to the growth in properties available as well as increased infrastructure facilities. Meanwhile, the role of the construction industry within the Sri Lankan economy has continued in a growth trajectory in this context. This is an area of importance which highlights the dire need for additional properties and infra-structure facilities with the development of the country.
The development is not merely limited to Colombo; other major towns such as Galle, Kandy etc., are also undergoing private as well as public sector investments to improve infra-structure facilities available in these areas. They are of the view that such investments are likely to maximize the benefits to the investors and contribute towards achieving appropriate outcomes which will benefit the economy, as a whole. The construction industry is a clear reflection of the direction that the country is heading towards and the growth they are likely to achieve.
In the fourth quarter of 2016, the construction industry of Sri Lanka achieved a record breaking turnover of Rs.201 billion which consists of a contribution of 9.6% in total to the economy of the country in 2016, in comparison to 8.7% in 2015. Thus, the construction industry has experienced growth over the past period and it is very likely that the industry will continue to enjoy growth in the future (Rathnasingham, 2017). This is owing to private as well as the public-sector investments in the construction industry, with a view to achieving positive results thereof.
The contribution achieved by condominium properties or real estate related to housing etc., remains one of the important aspects of development. There are several types of real estate developments being undertaken and housing remains one of the prominent aspects in real estate development across the world. The global real estate assets have reached an estimated US$217 trillion in 2015. Therefore, it is important to note that this represents 60% of the total global mainstream asset base. Of this, 75% are residential real estate development projects. This scenario is not far from the Sri Lankan context (Rathnasingham, 2017).
Since 1st January 2014, Rs.567 billion worth new loans have been taken of which 53% are loans taken for acquiring property in the country. Resultantly, this highlights that the property sector remains one of the main areas of development. Meanwhile, of the loans provided, 62% are related to the development of residential properties (Rathnasingham, 2017). Therefore, the main area of investment related to the development of real estate, remains with the housing sector. This is one of the main areas that has experienced high demand, due to changing economic dynamics.
Despite, urbanization being low in Sri Lanka but in comparison to several other Asian countries, growth of the cities have been a fact here as well. Meanwhile, the congestion in the main city areas are on the increase. It is important to note that the substantial growth in population is also one of the key aspects that has created this situation. Likewise, the growth in tourism and other industries have also contributed to the increased demand for residential as well as non-residential real estate properties in the country (Siniti, 1990). This is consistent with a nation experiencing growth and facing this stage of development. Thus, the role of growth and the need for properties have experienced a positive twist in the past decade.
It is estimated that an additional quantum of 20,000 new housing units are likely to be added to the real estate stocks that are currently available in the market by 2020; meanwhile in 2018, approximately 2,800 units are likely to be to be included to this calculation. This highlights the growth of real estate related to housing supply which is likely to continue to be an important part of the growth of the industry. Meanwhile, there are over 150 projects which are still pending approval as well. Therefore, this highlights that in the future, the supply of residential real estate properties is likely to increase further (Sunday Observer, 2017).
Figure 1.1 – Growth of the real estate industry of Sri Lanka (Source: Sunday Observer, 2017)
There are several factors that contribute towards the growth of the industry; one of the major factors being the growth in population followed by the growth in income levels of the people in the country. The growth in population and growth in income levels lead individuals to occupy superior quality properties and real estate developers are likely to focus on the quality of the construction as well as other factors which are linked to this aspect. The Sri Lankan economy is likely to continue, on a growth trajectory and this indicates that the industry will experience incremental business in the future context as well. Thus, the real estate industry and the associated economic importance will continue to grow. Meanwhile, it is noteworthy that with the construction of the Port City, the demand for such properties will continue to grow as Sri Lanka is set to become one of the international hubs and trade points.
The customers who are purchasing the condominiums belong to the medium to high class categories of the country. They enjoy an appropriate income level that can support the finance of the purchase. It is also likely that they will purchase these apartments with the view to acquiring additional living space. Thus, the actual values and the requirements of the parties who purchase these properties will need to be identified and appropriate measures undertaken subsequently, to fulfil these requirements. Such initiations will ensure that the buyers are attracted to the real estate space.
According to Clawson (1978), there are three types of values which require to be integrated namely; cultural values, personal values, consumption values, and product benefits which require to be developed to meet these value needs. For instance, the culture values may include possessing the appropriate level of privacy as well as the ability to communicate with members of other housing units etc.
Meanwhile, the consumption values require to be linked with the living space as well of the facilities available. It is also important to note that they require to possess suitable access to the condominium premise. It is also likely that several personal values are prevalent as well; for instance, the person might seek to live in a secured place with minimum hassle in maintaining the premises. This will enable them to utilize their time effectively and manage their activities related to these aspects. This will contribute towards enhancing the lifestyles of the community. Therefore, introducing the appropriate value mix will ensure that the markets observe the value offered by the properties, which will subsequently create demand for the premises, as it will be positioned to meet the needs of the market appropriately.
As per observations made by Sheth (1991), there are several benefits that a customer envisages to fulfil, by purchasing a property namely; Functional benefit, Social benefit, Affective benefit, epistemic benefit, Aesthetic benefit, Hedonic benefit and situational benefits are some of the benefits they aspire to achieve. Thus, they will be able to ensure that the properties they have purchased are equipped to meet the exact requirements they envisage and contribute towards improving one’s living standards. Resultantly, they will be able to achieve positive results in the future context and enjoy considerable benefits.
It is important to note that the competition in the market is increasing; meanwhile with the immense growth observed with the supply of residential housing units, the prices associated with the units are could be a factor that influence negatively. Therefore, the increased competition levels highlight that there could be price competition amongst the parties. This aspect eventually indicates that the overall price levels could fluctuate and the industry could be impacted by lowering of margins in the short run at least. Therefore, it is paramount that the companies remain focused on developing appropriate types of properties, which will subsequently be purchased by the potential customers, as they meet their specific requirements.
Apartment Ownership Law (1973) which forms part of the Sri Lankan legislature, is related to the transfer of completed condominium units. However, the act was amended in 2003 to provide for the inclusion of sale agreements which cover partially completed units as well. Meanwhile, it is the general practice of the industry to finalize the sale agreements with the customer, prior to the completion of the property. Resultantly, this initiation will enable the real estate companies to manage their cash flows efficiently, and ensure that the property investment reap results whilst the property is being constructed.
It is important to note that the law does not contain specific provisions to govern the construction standards in several areas. Resultantly, this gives the construction companies the freedom to proceed with the development of the property with minimum supervision, which is likely to lead to construction of properties which do not conform to international standards. Thus, the outcomes in the future do not project a positive picture. Meanwhile, there are several properties that were constructed without obtaining relevant approval, due to lack of awareness as well as the absence of applicable law to regulate the process (Senaratne, 2006).
Resultantly, this has created issues to consumers who are likely to be potential residents of these properties, as the premises are not regulated by an appropriate set of guidelines, which would have assisted them to select suitable premises that conform to the requirements them envisage. Thus, they might not be able to select the properties which are suitable as per their need, whilst ensuring the premises meet the minimum quality standard requirements. This is one of the main issues that are affiliated with the property industry of the country and requires an appropriate set of solutions in the future, to resolve these issues.
The supply growth is high; in 2018 alone, there will be 2,800 and in the next three years, there will be minimum of 5,000 units in supply. This shows that the supply is growing continuously. This increase in supply could lead to the customers being able to select the property better. Rathnasigham (2017) in his discussion with Ravi Abeysuriya finds would that this is a relatively new industry and the customers are not well aware of the needs they have specifically. This would result in the customers not selecting the best properties that would match the requirements they have.
This shows that there is a supplier side as well as customer side issue; customers not knowing what to look for when they are purchasing a condominium highlights that the suppliers would get away without providing these properties to the customers. As the condominium purchase decision impacts the customers in the long run, they have to evaluate many aspects rationally before making any such a decision. Thus the study will indicate if the customers have the necessary areas they need to look into when making this decision.
The study attempts to identify the relevant customer related issues; during the observations, it was highlighted that the customers do not have a clear understanding regarding the quality parameters that are applicable to the properties they intend purchasing. The lack of guidelines and applicable laws have contributed to this issue. However, it is important to identify the main areas of consideration which they need to address, when purchasing a property. Resultantly, there are two research questions of the study.
- Why should the customers be concerned about various areas when they What are the key concerns to be considered when purchasing a Condominium?
- How should the customers take the right steps to purchase the condominium properties that are suitable to their specific needs?
The researcher has classified the research objectives as primary and secondary objectives.
- To identify the factors that need to be considered when purchasing a Condominium.
- To explore the reasons which has contributed towards the lack in awareness among prospective Condominium buyers in Sri Lanka.
- To measure the casual relationship between the factors to be considered when purchasing a Condominium and the effectiveness of the purchasing choice of Condominium buyers.
This should highlight as to how the study is significant to the various parties; as it is important to have a high level of significance to justify the feasibility of conducting the study, whilst provide the framework under which the study should be conducted.
The study is seeking to identify as to how the customers will select an appropriate set of properties which conform to the needs they envisage. It is important for the customers to identify the relevant areas which will impact their decision to purchase condominium related properties for housing purposes. Meanwhile, the real estate agents would also be interested, as they will have access to information regarding the appropriate features that potential buyers envisage. Resultantly, there are several stakeholders as indicated below, who are that are interested in the is discussion. The following indicate the details.
- Clients/customers/investors: The customers are the key target audience and meeting their expectations and values as Condominium buyers is key for the sustainability of the Condominium project. Additionally, Condominium buyers need to acquire sufficient knowledge and skills to ensure that the best value proposition is selected. This study aims to introduce a set of guidelines for customers to consider as being critical areas of concern, and optimize one’s Condominium purchasing decision, and minimize risks.
- Developers: The findings of the study can be used for making decisions in developing the Condominium projects, and this study provides the framework for understanding customer requirements through formal guidelines. This will enable them to position their projects appropriately and ensure that they meet the exact requirements of the customers.
- Government Authorities: The findings of the study can be used by government authorities/bodies such as BOI/UDA/CMA/CMC to understand key customer priorities. This will enable the government to understand the loopholes in the current system and implement appropriate action to resolve such anomalies and ensure that customer perspectives are met positively.
- Real estate agents (individuals): The findings of the study can be used by real estate agents to understand the priorities of buyers who intend purchasing condominiums, and cater their solutions to maximize the buyer’s choice. This will help them to make recommendations to their customers accordingly.
- Real-estate Companies and Facility Management Service Providers: Understanding consumer behavior has become a key exercise of business stakeholders who are required to cater to a competitive value proposition. Therefore, the findings of the study can be adopted, by real estate companies and Facility Management Companies in Sri Lanka, to understand the key criteria and requirements for effective purchasing choices in Condominiums.
- Contractors: Contractors are the key stakeholder party in society and they need to understand the customer expectations, the key customer guidelines, and the rationale of customer guidelines to be considered by clients. The findings of the study can be used by contractors to understand the key criteria and requirements of effective purchasing choices of Condominium buyers. In return, their quality will improve and build goodwill and reputation.
- Society and country: Formalization and development of the Condominium sector will benefit all social elements in society and the country. The findings of the study can be used to maximize the values and benefits of society stakeholders for secure and safe purchasing.
The study is targeted to provide an understanding of the main factors that the customers take into consideration when purchasing a property of this nature. The study can be directly linked with the purchasing habits and awareness levels of customers who intend purchasing condominium-based properties in Sri Lanka. Thus, the insights provided by the study remain significantly useful in evaluating the sector and sector related outcomes.
The following section highlights the structure of the report;
Chapter 1 – Introduction
Chapter 2 – Literature review
Chapter 3 – Methodology
Chapter 4 – Findings
Chapter 5 – Conclusion, discussion and recommendations
This chapter elaborates on the studies undertaken thus far and the concepts affiliated with the study area. It is important to identify the main areas affiliated with the study discussion and how they are linked with other aspects as well. Thus, the literature review has the ability, to identify the main variables of the study and how these aspects are linked in the process. The study will be able to evaluate these aspects and relationships in detail. Rathnasigham (2017) in his discussion with Ravi Abeysuriya indicates that the industry is relatively a new one. This in other words indicate the fact that there is lack of awareness about the industry and the customers are especially not aware as to the key aspects they need to evaluate when they are purchasing of a property of this nature. As the purchases would impact them on the long run, selecting of an inappropriate condominium property would be a waste of resources. With the increased industry maturity, the customers will have a better level of awareness of the features they need to evaluate prior to making a purchase decision.
When a city is developed, the population living in the city increases, owing to the numerous advantages it offers; this situation primarily occurs, since the city will offer the public with improved economic conditions and attract people to secure a residential facility. However, this contributes to several problems as well, due to restricted residential facilities. The cities have restricted space and resultantly the available land requires to be effectively managed and benefits maximized (Tanaka, 2013). Thus, the construction of appropriate residential space to provide such living conditions will remain an area of importance. Therefore, possessing such space will provide positive results in the future.
Moreover, the living spaces thus developed, need to suit / accommodate the living standards that they expect. It is likely that with high levels of disposable incomes, people will demand for improved living conditions. This is an area of importance which demands the attention of the property developers (Yip, Chang & Hung, 2007). There are several stakeholders who are associated with the fulfillment of these aspects and they will all have to ensure that the customer requirements are fulfilled. This will enable the city authorities to plan the residential areas consistent with the requirements of the residents and ensure that they meet the need of the occupants (Turner, 1994).
Meanwhile, the city requires to be planned in such a manner; where the culture, the value systems and the lives of the people are reflected in the design the city is constructed. This is an important aspect which requires to be considered, as it will contribute towards identifying the values associated with the city and how the parties will be able to achieve appropriate results consistent with the expectations (Han and Tan, 2003). Likewise, the authorities will also demand certain expectations from the planners as well as the builders of the properties, and they require to conform to such expectations as well.
The reference of the word condominium indicates that it is a building complex comprising of separate units which belong to different parties. Thus, the word condominium has a very clear meaning to it. The buildings could stand as a singular unit or several units. Building of such structures offer appropriate separate residential units within a complex (Shimizu, Takatsuji, Ono & Nishimura, 2010). This is closely affiliated with the western style of living since the development of the cities has primarily commenced in the west. Likewise, with the development of the cities in Sri Lanka, the condominium concept is gaining immense popularity. Meanwhile, there are several reasons that support the development of this type of living.
One of the main aspects is the change in lifestyle. Society have observed that the lifestyles are changing. Therefore, with the change in lifestyles, the community are compelled to live in appropriate environments, conducive to the change. For instance, most of the people who would purchase condominiums are those who live in cities and work in the cities (Lum, 2014). They find such a living environment convenient to them. They can live closer to their work places as well as other lifestyle related areas.
Another aspect that supports the development of condominiums is the effective management of space; the city has limited space and this scarce resource requires to be managed effectively. This indicates that the need for management of space in the city, justifies the building of apartments of this nature (Pheng, Raphael & Kit, 2006). This will ensure that any resident will be able to live in the space provided whilst the actual density of the people will increase within a designated space. Thus, the condominiums would provide an appropriate solution to space management issues.
The increase in high-rise buildings indicate that development is occurring in several ways. This is another area that these structures stand to facilitate. Having any such structures reflect that the city has been able to effectively provide residential facilities to society and this is a symbol of the assets and the wealth associated with such city areas (Dischinger & Jackson, 2006). Thus, the governments would prefer to experience additional investments in the condominium building sector.
The housing problem in a city is one of the main infra-structure problems that the authorities are faced with. They will naturally have to find an appropriate solution to address this issue. Condominiums would comprise part of the solution to meet the needs of a congested city area. Therefore, this initiation will enable private and public investments to be implemented, with a view to providing living space for the people (Konno, 2015).
Meanwhile, residents in such properties would expect to face minimum level of hassle in terms of meeting maintenance needs; therefore, it is important to build suitable maintenance capabilities and in general the management parties of these properties will have their own maintenance systems in place as well. Such a system will enable them to achieve the appropriate outcomes in the context of maintenance activities and maximize the benefits to the residents (Johnson, 2006).
Thus, the above aspects indicate that there are several reasons that drive the need for condominiums of this nature. It is important to ensure that these facilities conform to the needs of the customers and the benefits they provide are to the satisfaction of the customers (Yip, Chang and Hung, 2007). Therefore, achieving the appropriate benefits will ensure that the country is posed to reap the relevant economic and social results expected from them.
Sri Lanka has a growing economy; the country having emerged from a 30-year civil war, requires to concentrate on re-building one’s infra-structure as well as the economy. Thus, the role of city planning and development plays a significant part in the current context. This will ensure that the country will be able to continue its development initiatives and achieve the expected results in the future context (de Silva & Ranasinghe, 2010). Meanwhile, the country has observed that the development dynamics are constantly changing which has had a significant impact on the demand for condominiums in the country. The factors that impact these changes are related to the development and increase of disposable incomes.
The government of Sri Lanka has already financed city condominium building schemes. These structures were built targeting the lower to the middle income earning category of people, who were residing in the most undesirable areas of the city and this change in accommodation facilitated improved living conditions for this community (Anthonisz & Perry, 2015). This has also contributed towards the development of new communities amongst the urban dwellers who seek superior residential facilities. The state initiatives in this context continues to ensure that the urban lower to middle income earners, possess the opportunity to own dwellings in the city.
- However, the main issue with the above program being that the supply is limited; Resultantly, the government has failed to meet specific needs of the parties and achieving appropriate results in the future. On the other hand, while the government is catering to the needs of the lower and the middle income earning category, the private sector has recognized the need to fulfil the aspirations of the middle to high income earners (Kowshala, 2002). They also seek to own city homes; however, they have higher expectations regarding the definition of luxury and facilities. The private sector would invest in an area where they are able to envisage a high level of profits and there is a guarantee of achieving these income levels for the investors. Naturally, this has led the private sector to invest in lucrative areas and benefit from the outcomes (Sheth, 1991). For instance, Colombo as well as the suburbs have been presently targeted by the private sector as they believe that such areas could provide the highest demand for the facilities they construct.
The definition of the word condominium highlight that there are several living spaces available within a single building complex. Meanwhile, according to the law of the country an individual will be able to own the space within these buildings. Therefore, everyone is in a position to own these residential units individually, irrespective of the ownership of the land that the building has been constructed (Siniti, 1990). This style of living was regarded as a western lifestyle until recently. However, Sri Lanka has embraced this lifestyle, with the development and enlargement of the cities, whilst using the same model for expansion of urban housing.
As discussed previously, the role of the construction industry is considerably important due to the immense strides Sri Lanka has experienced in economic development where the construction industry has experienced a high level of contribution from the growth of the real estate sector. Meanwhile, it is apparent that the private sector is very keen to undertake investments in the development of the real estate sector in the future (Kowshala, 2002). Resultantly, it is envisaged that Sri Lanka will continue to experience immense growth and be positioned to maximize benefits as an international hub in the future. Thus, the demand for the real estate assets will continue to increase and the investors in the current context will be able to benefit in the future.
There are several reasons which drive the demand for the condominium sector in any country; one factor is related to the lifestyles of the potential customers. They are living and working in the city and they need appropriate living space. On the other hand, with the increase in disposable income levels of individuals owing to economic growth, they are likely to demand for additional luxurious facilities affiliated with their respective lifestyles. This also could drive the demand for high end properties of this nature (Central Bank, 2016). The State will also provide a favorable environment for constructions of this nature as they will contribute towards increasing living space which is an important component of city development. Likewise, the condominium lifestyle construction will also create additional space in the city, for other development projects. Thus, the role of condominiums remains vital and it can be observed that these are the main factors that influence the development of the condominium sector of Sri Lanka as well (Kowshala, 2002).
The Sri Lankan government has provided approval for several large to medium scale condominium projects post the cessation of war in 2009. Meanwhile, it is apparent that this trend will continue since the economic outlook of the country in the future remains positive. There are over 20,000 new housing units which are expected to be constructed under the condominium projects, that are ongoing. Therefore, the sector continues to grow and achieve positive results. There are certain projects that cater to the high-end income groups, whilst certain projects target the medium income earning category. However, the role of the state remains vital in the development of these projects. “Sri Lankan government has given the strategic attention for regulating and developing the industry through establishment of institutional setup and formulating legislation framework” (Jayalath, 2016).
This area of the study has received minimal attention, since this aspect has not been considered as being significantly relevant to the needs of the people. However, the importance of the sector is high and continues to gain attention in the country. This aspect is clearly evidenced by the high demand experienced for condominiums currently and this is likely to ensure that this sector will become considerably profitable in the future. Thus, the industry continues to grow (Anthonisz & Perry, 2015). Meanwhile, the profit potential drives the supply of the properties and development of assets in this area.
In the Sri Lankan context, there are several other reasons that drive the demand for condominiums to be purchased than the conventional purpose of land purchase to build a house. The land prices in the city are exorbitant and once the land is purchased, there is an extra cost to be incurred towards constructing the house. However, the potential customers may not possess the necessary expertise and funding required for the construction. Thus, purchasing of a condominium is likely to be the best option that they wish to pursue (Nithyamanohari, 2014). Furthermore, the locations of the condominiums would ensure that they reside closer to the areas where they wish to remain. Therefore, the customers can select condominium properties that are located in appropriate areas which aptly suit their needs.
Factors such as the aesthetics remain another important area, which the construction industry requires to focus and ensure that they conform to the required standards. This shows that purchasing of such a property is likely to contribute positively to the needs of the customer and allow the customer to benefit in the future.
The main drivers of growth of condominium projects is due to the increase in population as well as demand for superior living conditions. The rapid industrialization that the country has achieved is one of the important driving factors for the increase in condominium construction related activities. The demand for properties of this nature is likely to be high and this triggers the private sector investors to evaluate this segment and continue to invest in the area (Senaratne, 2006). The industry operating model is such that the potential customers can invest in these properties prior the completion of the construction.
Thus, the above discussion indicates the fact that while the country has been able to continue to invest in the sector, there will be continuous demand for the properties that are constructed. However, there is the possibility that short term over-supply scenarios could occur; however, the long-term context is positive and the investors will be able to continue to develop additional properties with the view of profiting from their investments (Jayalath, 2016). Meanwhile, additional facilities of medium to high end construction of such properties has been undertaken, since it is envisaged that there will be continuous growth in the long-term, for premises in the urban areas of the country.
Consumers are compelled to take decisions when they are purchasing a certain product or a service. Therefore, it is important to note that there are various suppliers who supply such products and services in the market (McNeal & Yeh, 1996). Meanwhile, the consumers need to ensure that they purchase these products consistent with the needs and the expectations of the markets. Likewise, it is important to note that consumers are likely to behave in a different manner given the situation they encounter. Thus, the suppliers require to identify the decision-making process associated with consumers and ensure that they cater to the specific requirements of the consumers efficiently (Foxall, 1993).
The consumers remain the most important stakeholder of an organization, since the former generate revenue for the organization. Thus, if the organization fails to identify the importance of the consumer and ensure that they fulfil the needs of the consumer, it is unlikely that the organization will be able to function in an appropriate manner and generate growth in the market share they cater to. For instance, if the business does not recognize the exact requirements of the consumer, it is unlikely that they will be able to cater to the specific needs of the latter (Moutinho, 1987). Therefore, the failure to provide such benefits to the consumers, are likely to create a situation where the customer will distance themselves from such organizations which will eventually lead to instances where opportunities will be enhanced for competitors. Therefore, the above-mentioned situation signifies the level of dissatisfaction created amongst the consumers, which compel necessary remedial measures to be implemented, to cater to these specific needs in place (Amin, 2017). Thus, the businesses will need to specifically identify the customer needs and ensure that they cater to these precise requirements. Meanwhile, it is important for the organization to accumulate an in-depth understanding of one’s customer and develop mechanisms which will enable them gain an appropriate insight to the needs of the client and cater to these specific market needs (Galloway, 1999). Such will enable them to develop products and services which will meet precise market needs.
The products and the services are different to each other. There are several purchasing decisions that a consumer is likely to engage with within a certain time period. Thus, the nature of the products and the types of services require to be taken into consideration when consumer buying behavior is evaluated (Solomon, 1996). For instance, a person who is purchasing a property would behave in a manner that is totally different to a person who is purchasing a fast-moving consumer item. The following chart depicts Kotler’s (2000)’s categorization of purchase types.
Figure 2.1- Types of purchasing behavior (Source: Armstrong, 2004)
The above diagram indicates two main aspects which require to be considered; namely; the level of involvement of the consumer and the significance of the variety between the brands. There are certain instances where the variety is low. Thus, the consumers might not observe a considerable difference in terms of variety that is offered by the suppliers (Narula & Desore, 2016). This might indicate that when the customer is selecting the products they require, they are likely to select from any party and receive basic benefits that they seek, from the given product or service.
On the other hand, it is possible to identify that the customers may not engage in the purchase decision making process. For instance, when the consumers are purchasing a product that they use daily, they will make the decision using their impulse. They will be fully conversant of the product and the nature of the product they purchase (Gabor, 1979). However, it is important to note that when they are purchasing a house or a vehicle, they will undertake considerable research to identify the optimum choice, prior to reaching a decision. Thus, the latter has a high level of customer involvement as opposed to impulse decisions.
This will enable the suppliers to supply the customers with the most appropriate product consistent with the precise needs they envisage (Kumar & Varshney, 2012). Therefore, when purchasing of a condominium is being considered, there are several differences between the offered values from different suppliers and the customers are naturally considerably engaged in the purchase decision. This conveys that it is a complex purchasing behavior that is applied. Resultantly, it is essential to evaluate how the consumers behave in situations where they are compelled to purchase high value items such as a home or a vehicle (Lebermann, 1984). By understanding this behavior, the suppliers will be positioned to structure the product and the services to meet the needs of the customers.
It is important to note that when a person is making a purchase decision, one of the main aspects that require to be present is the need to purchase. This means that there is a need that the consumer intends to fulfil. This means that the consumer will purchase the product to fulfil this need specifically. Meanwhile, once a need has been identified, the potential customer will search for the relevant information (Evens, 2009). This will enable the customer to evaluate the relevant details regarding the product or service, they seek to purchase. Likewise, they will be able to identify the alternatives that are available and select the optimum option that will provide them with the exact functionalities they envisage. Moreover, they will also consider the price and the quality aspects prior to purchasing the given product. Subsequently, they will purchase this product and will use it. They will gain a certain experience which could be either positive or negative (Köksal, 2007). Once the customer gains the required experience, he will decide if he would re-purchase the product or recommend it to another party.
Figure 2.2 – Five stage model of consumer purchasing decision-making process (Source: Kotler, 2004)
The above model indicates that decision making is not a simple process for the customer; he requires to identify the values sought and ensure that he selects the product or the service consistent with these value proposition in place (McNeal & Zhang, 2000). Thus, the overall decision-making process is likely to maximize the benefits to the parties and ensure that they all achieve positive outcomes. However, it is also important to note that depending on the type of the decision made, the actual length of each of these stages would differ. Thus, the consumers will spend different durations and effort at each stage, depending on the importance of the purchasing decision they are likely to take (Tilikidou, 2013). The suppliers will require to understand this behavior and ensure that they cater to each stage as necessary.
This model indicates that the company which is selling a product or a service will have to develop products that are appealing to the stimuli of the buyer. This will enable the buyer to purchase the products consistent with the needs they possess. The areas of stimuli are divided into two namely; marketing stimuli and others; marketing stimuli include the marketing mix factors which require to be developed to meet the needs of the consumers (Craig‐Lees, 1998). Thus, the marketing stimuli are the factors that the supplier will be able to control. On the other hand, it is important to note that the other stimuli such as political, economic, social and technology factors do not fall under the control of the management. These will eventually result in the customers being able to select the products, the brands, the suppliers as well as the quantum of products they intend purchasing, including the frequency of purchases (Wirtz, 2001).
Figure 2.3 – Stimulus-response model and purchasing behavior (Source: Kotler, 2004)
The above highlights that the company will require to develop the stimuli consistent with the needs of the customers. If the customers feel that the product has the features they require, they are likely to purchase the product from the market. On the other hand, it is important to note that the customers will purchase products offered by the competitors, if they meet the precise requirements they possess (Verbeke & Viaene, 1998). Therefore, the response that is expected from the customers require to be evaluated, to ensure that the right kind of stimuli are developed.
There are several factors that would influence the decision-making process associated with buyers. It is important to identify the main factors that contribute towards decision making as this will improve the overall effectiveness of the results and ensure that they cater to the exact needs of the consumers (Moutinho, 1987). Understanding the relevant factors will enable the decisions to be made consistent with the needs of society and ensure that the outcomes are positioned to meet the needs of the consumers in the future.
Figure 2.4 – Factors influencing consumer buying behavior (Source: Kotler, 2004)
When a person is making a purchasing decision, there are several elements that are involved with the decision. Meanwhile, it is important to note that there are certain psychological aspects that are likely to impact the purchasing behavior of a person. For instance, the beliefs and the attitudes are some of the important factors that can be identified with such decisions. On the other hand, there are personal aspects including the age, occupation, and education and such like which impact the decision. Likewise, social impact is also important including, social economic class, reference groups and the status indicators of the person which are certain key areas (Tilikidou, 2013).
The role of the marketing program is important and these marketing programs require to be developed to suit environmental as well as buyer requirements. This will ensure that the buyer will be able to purchase the products and services consistent with the exact needs they possess (Narula & Desore, 2016). Meanwhile, the cultural aspects as well as the buyer responses are significant areas which requires to be taken into consideration, when evaluating these aspects.
It is also important to note that not all these factors will influence the buyer decisions which are affiliated with the product. The products that are selected by the parties will have to be considered within each framework, since they are all important in the buyer decision making related process (McNeal & Zhang, 2000). Thus, it can be concluded that appropriate buyer behavior influencing factors require to be identified, based on the products that are selected and how the parties intend to cater to fulfil exact requirements. Therefore, the above aspects remain an area of importance.
When the purchase of a condominium is being considered, the nature of the actual activity requires to be identified in any context. Therefore, one of the prominent factors which requires to be considered in such an instance, is the cost of purchase. The cost factor remains vital, since the buyer will require to determine whether they are receiving appropriate benefits, which suit the purchase price they have committed for the ownership of the condominium apartment (Kowshala, 2002). Thus, the costs require to be developed consistent with the exact requirements of the buyer and subsequently ensure that one has received “value for money”.
Meanwhile, it is also important to identify the features they offer; for instance, facilities associated with the condominium such as a pool and a gym etc. Likewise, there could be several other value- added benefits that are provided by builders of such facilities. This will enable them guarantee that the condominium meets the required benefits of the market. Resultantly, the facilities offered by the properties should be consistent with the exact needs of the customers as well (Senaratne, 2006). Thus, the competitive advantage can be developed, based on the additional features they offer to the consumers.
The customers will also consider the location; the location plays a very important role as they will seek to live in a particular area, for a certain reason. Therefore, it is important that the property developer evaluates the specific needs of the target audience, and ensure that they select the appropriate area which meets these requirements. Further, the ability to access the location using different means is another area of importance that customers require to take into consideration (Jayalath, 2016). These aspects require to be identified to ensure that the customers are likely to be satisfied with the features on offer.
Methods of financing requires to be considered as well; there are several methods of financing of such a purchase. It is likely that the customers are considering the finance of such a purchase in the long-term, since they are likely to derive these benefits over a considerable period. Thus, appropriate financing methods require to be negotiated by the company as well as approach other institutions, who offer such facilities (Senaratne, 2006). This will enable the customer to evaluate several financing options, and select the optimum solution which meets their satisfaction. Therefore, this will enable the customer to consider the financing options that they have and make decisions related to the facility they seek to purchase.
The design of the facility and the level of luxury affiliated with the premises are some of the important aspects which require to be considered. Meanwhile, it is apparent that most often the customer is likely to negotiate the maximum luxurious facilities, for the least cost in relation to the purchase. All these aspects highlight that the property developer will be able to offer the required benefits consistent with market needs (Kowshala, 2002). Thus, the design, aesthetics and the other aspects remain important areas to be evaluated, when considering the purchase of a condominium.
The literature review has provided a comprehensive set of insights associated with the approach customers undertake, when reaching purchasing decisions. It is important to note that the customer will reach a purchasing decision, only after considering several factors. They will require to ensure that the decision they reach, will contribute positively towards improving their lives in the future. Meanwhile, it is also important to understand whether the decision reached, offers the buyer the appropriate benefits for the price negotiated in the future as well. Thus, these areas require to be evaluated, when purchasing decisions are negotiated for condominiums.
Buyers behave differently towards different products and services that they intend purchasing. In this instance, it is apparent that the decision involves a considerable stake and naturally they get involved and evaluate several factors prior to reaching any decision to purchase such properties. Thus, the buyers will ensure that they evaluate the key areas and make the appropriate decision that will allow them to benefit from the outcomes. This will provide appropriate long-term results to the buyers as well.
This is the section that the methods used in the development of the study are discussed. Applying the appropriate methodology in place is important since studies of this nature are faced with several limitations. These limitations could lead to issues associated with the accuracy of the findings and suitable approaches require to be incorporated, to ensure that the study achieves the relevant results consistent with the needs of the parties. This chapter consist of conceptual model and hypotheses section. Further, the variables are operationalized and linked with the questionnaire. The sampling approach as well as data collection and data analysis approaches are discussed in this chapter. Thus, the chapter is useful in establishing of the right methodologies with the needed justifications to the research.
The study has many variables and there is the need to evaluate the relationship between these variables. This is why the conceptual map is vital and forms the basis for this discussion. Meanwhile, adopting the appropriate conceptual framework will ensure that the field material will be developed to meet the exact needs and the expectations of the parties. The following are the conceptual areas that are affiliated with the study.
The conceptual model was designed based on an in-depth knowledge base of relevant subject areas (Independent variables) including awareness of charges (service charge, sinking fund, insurance premium, utility charges, awareness of Apartment Ownership Laws [Apt. Ownership Act], Common Amenity Board Act, and House Rule/By-laws), awareness of Construction Standards (ICTAD, CIDA, BS, NFPA and others), awareness of Compliance (CMA,CMC,CEA), awareness of Regulations and Governing Bodies (UDA, CMA, CMC, CEA, CEB, LECO, NW & DB, Department of Labor), awareness of Administration (Agreements, Documentation, Certificates), awareness of Accounting (Budget, Invoicing, Collection, Banking), awareness of Managing Methods (Outsourcing, Self-Managing), awareness of Warranties and Guarantees (Durations, Conditions), awareness of maintenance (Minimum Requirements, PPM, Consumables, Tools, Skilled Manpower), awareness of Critical equipment (Gen Sets, Fire & Safety System, Electricity supply, Water Supply), awareness of Health and Safety (pest control, no pets, compulsory services, noise control, limitation of working hours), awareness of Security (Restrictions, Registrations, short- and long-term rental clauses, visitors rules ), awareness of common area charges (how the cost is calculated, savings), awareness of vehicle parking (allocation ratio, size, disabled parking, visitors parking, restrictions). Meanwhile, the dependent variable is the effectiveness of the purchasing choice of condominium buyers in Sri Lanka.
Figure 3.1 – Conceptual model (author developed, 2017)
Thus, the study seeks to evaluate how each of the independent variables would contribute to the overall effectiveness of the dependent variable which is under consideration.
184.108.40.206. Awareness of charges
Once a person has purchased a condominium, it is important that the owners of the property understand that there are several other monthly charges affiliated with the maintenance of these properties. These charges may include common area maintenance charges, annual maintenance charges, contracts for lifts, fire as well as other security systems etc. Backup power and other such facilities as well as value added facilities might have certain charges (Budin, 2013). The owners of the apartments are liable to pay these charges in conformance with the agreements established according to the Apartment Ownership Act in Sri Lanka. These charges are calculated based on the share value of the Apartment or square foot area of the apartment. Current charges (all-inclusive) for the luxury category are between Rs. 8/- to 26/- per square foot. In this situation, if you own an apartment around 1000 Sq. ft., then the monthly charges would be approximately Rs.8,000/- to 26,000/-. Thus, the customers need to be aware of these charges since they will be required to pay for these services.
220.127.116.11. Awareness of the standards
There are international standards as well as government regulations that require are adhered to, during the construction of these buildings. Therefore, it is important that construction should be undertaken, based on the best industry standards which will ensure that the structure is long lasting and requires minimum maintenance. The material utilized should comprise of the best quality standards and the consultants of the projects should provide a clear certification to confirm that these projects have adhered to appropriate quality standards and conform to the expectations of the buyer (Dias, 2017). The buildings will also need to be constructed in such a manner that the safety of those who use them are guaranteed. Therefore, it is essential that the customers are conversant of the standards that have been adhered to during construction.
18.104.22.168. Awareness of Regulations, Laws, Compliance and Governing Bodies
Meanwhile, the customers should be aware of the laws that govern these constructions, whilst also be conversant of the rights and the obligations they are entitled. Condominium Management Authority (CMA) is the body that would regulate the sector. There are several laws affiliated with the sector; 1st Act (Apartment Ownership Law, No 11 of 1973 of The National State Assembly) was certified on 20th March 1973, followed by Amended Act No 45 of 1982 which was certified on 30th December, 1982, and Act No.39 of 2003 which was certified on 18th November, 2003. Apart from the CMA, the Urban Development Authority (UDA) and Colombo Municipal Council (CMC) are also responsible for the construction of these structures and achieving of appropriate results in the future context (Condominium Management Authority, 2011). Implementing appropriate legal frameworks ensure that customer trust can be appropriately enhanced.
22.214.171.124. Awareness of administration and maintenance
Once the building has been constructed and handed over to the customers, the property and the building require to be maintained. For this purpose, according to Apartment Ownership Act, No 45, 1982, a Management Corporation has to be established and out of this, a 14 member council appointed. This is the council that is responsible for the maintenance of the building. Meanwhile, the Management Corporation is considered as the management agent for the facility that is in consideration. They possess the ability to recruit suitable employees who will be responsible to oversee general operations of the facility, and ensure that the needs of the residents are met fully (Senaratne, 2006). This confirms the availability of clear legal provisions in the contract, to manage the maintenance functions of the condominium in place is essential. This is likely to provide positive results and maximize beneficial outcomes in the future.
126.96.36.199. Awareness of accounting and management methods
It is vital that the parties manage these facilities in such a manner, which will guarantee that optimum results are achieved. This will further ensure that appropriate outcomes are reached. Meanwhile, accounting systems require to be implemented and auditing introduced, to ensure that correct steps have been adhered, to guarantee the long-term capabilities of the Management Corporation. They will need to ensure that the outcomes are positive and the parties will be able to benefit from these results. This highlights that the management of the facility should be fully conversant of the procedures and regulations which govern the management of condominium complexes, to ensure a smooth operation of the facility. (Condominium Management Authority, 2011). Thus, stringent maintenance of appropriate standards of practices in accounting and auditing remains vital.
188.8.131.52. Warranties and guarantees
Meanwhile, it is also important for the owners of the properties to identify what are the warranties that are applicable to the complex. This will enable them claim replacements of any defective products or services. Meanwhile, one of the most common forms of warranties available is the contractor’s warranty that the construction of the project does not consist of any defects. Thus, this has provided the appropriate results in terms of the benefits that it would offer (Edirimane, 2015). The products and the fittings of the apartments are likely to offer certain guarantees and the users of these properties need to be aware of the applicable guarantees.
184.108.40.206 Critical equipment
The users of these facilities will need to be appraised, of the floor plan where critical equipment are placed. For instance, the fire alarm positions as well as the awareness on the security systems are important. This will enable them to take necessary action promptly in an emergency and ensure that the residents are adequately protected. Thus, it is important to identify where this equipment is placed and ensure that prompt attention is taken when such actions are required (Condominium Management Authority, 2011). Thus, the placement of critical equipment remains an important area which requires the attention of the management.
220.127.116.11. Awareness of house rules/health and safety/security
There are certain provisions in the Apartment Ownership Act as well including the CMA regulations through by-laws. These are important to regulate the living environment of the apartments. Meanwhile, all owners need to ensure that they comply with these requirements when they are living in an apartment. These house rules and the by-laws are developed to maximize the safety and the security of the living environment. The house rules to be adopted require 75% passing of votes, by the Management Corporation council. They can be adopted at either an Annual General Meeting (AGM) or Extraordinary General meeting (EGM) (Senaratne, 2006). Thus, the potential customers require to ensure that they are aware of these aspects, prior to purchasing of such a property.
18.104.22.168. Awareness of Management Corporation
The owners of the condominium complex need to be fully conversant of the role of the Management Corporation; this is the body that is automatically formed when the Condominium Plan is lodged with the Registrar of Lands. According to the Apartment Ownership Act (Amended) of 2003, all the owners would automatically become members. This is the corporation who will need to manage the building and the facilities and ensure that appropriate quality of the services are maintained (Condominium Management Authority, 2011). Meanwhile, a committee is formed by the owners, to ensure that they scrutinize the activities of the Management Corporation. Members of the Management Corporation are elected during the Annual General Meeting.
22.214.171.124. Awareness of the facilities
It is important to identify the nature of the facilities that a person is entitled to. This will enable the residents to use these facilities appropriately. Identifying these facilities and the benefits and the rules affiliated with the usage of these amenities will enable the resident to enjoy the facilities they are entitled too in an appropriate manner. It is important to understand what are the facilities they are entitled to, and how the residents will be able to use them effectively. For instance, the nature of the parking facilities can be one such benefit (Senaratne, 2006). Thus, the apartment owners will need to contribute to these aspects with the intention of achieving appropriate results in the future.
The role of the hypotheses remains important since this will provide the focus for the study; based on the above discussion and the experience gained by the researcher, these hypotheses can be developed. They then will be tested to determine whether they hold true (Saunders, 2009). There are ten hypotheses of the study in which it considers the conceptual model of the study.
H1=There is a positive impact of Awareness of Charges on the effectiveness of the purchasing choice of condominium buyers.
H2=There is a positive impact of Awareness of Construction Quality Standards on the effectiveness of the purchasing choice of condominium buyers.
H3=There is a positive impact of Awareness of Regulations, Laws, Compliance and Governing Bodies on the purchasing choice of condominium buyers.
H4=There is a positive impact of Awareness of Administration and Maintenance on effectiveness on the purchasing choice of condominium buyers.
H5=There is a positive impact of Awareness of Accounting and Managing Methods on the purchasing choice of condominium buyers.
H6=There is a positive impact of Awareness of Warranties and Guarantees on effectiveness of the purchasing choice of condominium buyers.
H7=There is a positive impact of Awareness of Critical Equipment on the effectiveness of the purchasing choice of condominium buyers.
H8=There is a positive impact of Awareness of House Rules (By-Laws), and Health/Safety/Security on the purchasing choice of condominium buyers.
H9=There is a positive impact of Awareness of the Role of the Management Corporation on effectiveness of the purchasing choice of condominium buyers.
H10=There is a positive impact of Awareness of Vehicle parking and Recreational/Common Facilities on the effectiveness of the purchasing choice of condominium buyers.
Variables were derived and defined for each construct/dimension and respective indicators were ascertained to measure each variable. A Five-point Likert scale is used as the measurement tool. The Five-point Likert scale was selected for the questions.
1 – Strongly Disagree
2 – Disagree
3 – Neither Agree nor Disagree
4 – Agree
5 – Strongly Agree
|Construct||Variables||Indicators||Literature point||Measurement Scale||Question number|
|Factors to be considered in condominium purchasing choice||Awareness of Charges||Buyer is fully conversant of all charges to be paid (estimated amount based on scientific calculation) towards his apartment unit||Budin, 2013||5 point Likert Scale||Q1|
|Awareness of Standards||Buyer is fully conversant of the construction regulations, compliance, approvals and standards of the building to ensure that he is purchasing a quality product||Dias, 2017||5 point Likert Scale||Q2|
|Awareness of Regulations, Laws, Compliance and Governing Bodies||Buyer is fully conversant of the Apartment Ownership laws, and competent authorities of the GOSL that regulate the industry||Condominium Management Authority, 2011||5 point Likert Scale||Q3 and Q4|
|Awareness of Administration, Maintenance||Buyer is fully conversant of the effectiveness of the building being managed and maintained in the same manner in the long-run.||Senaratne, 2006||5 point Likert Scale||Q5|
|Awareness of the Managing method and Accounting||Buyer is fully conversant of the plan of managing methods (self or outsourcing to a facility management company), and who will be responsible to manage the accounting functions of the building accounting.||Condominium Management Authority, 2011||5 point Likert Scale||Q6|
|Awareness of Warranties and Guarantees||Buyer is fully conversant of the product and service warranties and its guarantees. This ensures that the quality of the product is assured.||Edirimane, 2015||5 point Likert Scale||Q7|
|Awareness of Critical Equipment||Buyer is fully conversant of the brands, types and critical systems availability||Condominium Management Authority, 2011||5 point Likert Scale||Q8|
|Awareness of House Rules, Health and Safety/Security||Buyer is fully conversant of the rules and regulations applicable for a shared living concept and the safety of life and property||Senaratne, 2006||5 point Likert Scale||Q9|
|Awareness of the role of the Management Corporation||Buyer is fully conversant of the role of the Management Corporation and its obligations and limitations||Condominium Management Authority, 2011||5 point Likert Scale||Q10|
|Awareness of Vehicle parking and Recreational Facilities||Buyer is fully conversant of the number of facilities offered, allocations,||Senaratne, 2006||5 point Likert Scale||Q11|
|user privileges and level conveniences||Senaratne, 2006||Q12|
|Effectiveness and efficacy of purchasing choice of Condominium buyers||Effectiveness of buying decision||Return On Investment (ROI)||5 point Likert Scale||Q13|
Table 3.1 – Conceptualization table (author developed, 2017)
The researcher can select two types of research approaches, namely the deductive and inductive research approaches. “Deductive approach formulates hypotheses and tests them to obtain a quantitative approach, whilst the Inductive approach collects data and develops theories as is which are qualitative” (Saunders, 2009). Meanwhile, the researcher in the study aims to conduct a deductive approach based on the study problem and scenario. This study takes a scientific approach by using a quantitative, structured manner to resolve the problem.
The study requires to identify the nature of the relationships between the variables in consideration; the best approach to prove these relationships between the variables are quantitative methods since statistical models can be used to prove these relationships. Thus, the study naturally adopts a quantitative approach for evaluating of the outcomes.
The findings of the study can be used for the final decision-making process for industry stakeholders including Condominium Parcel Owners, Project Developers, Government Authorities such as CMA/CMC, Real Estate Agents/Brokers (individuals), Real Estate Companies, Facility Management Companies in Sri Lanka, Contractors and other stakeholders including foreign investors.
The researcher needs to select the most effective and efficient research strategy for conducting the study. According to Crouch (2003), “There is no superior and weaker research strategy and these strategies have relative advantages and disadvantages”. The researcher should select the research strategy according to the nature of the research problem and research objective (Saunders et al. 2009). The strategies are namely Experiments, Survey, In-depth Interviews, and Case Studies.
The researcher has selected survey by administering a questionnaire. Survey is suitable for descriptive and exploratory research and collects quantitative data by using the questionnaire. Meanwhile, data can be analyzed by using descriptive or inferential statistics (Saunders et al. 2009).
“The selection of most representative sample size for the study is highly critical and essential for conducting the study” (Sekeran, 2010). The researcher needs to define the population, sampling framework, sampling method and final sample size. These are essential tasks in conducting the research study. “Population is the set of sample elements which considers all units and elements of respondents of the study” (Sekeran, 2010). “Sampling framework is the list of proportion which represents the whole population” (Saunders, 2009). The final sample size is a finally defined sample for data collection.
For conducting the formal survey, the population of the study comprise of parties who have purchased Condominium Parcels in the Colombo area. Therefore, the current set of customers are considered as the population. Sampling framework comprise of the list of owners who made the purchasing decision of Condominium in the same area.
For this purpose, five prominent companies were contacted and their customer bases were obtained. This was the population that was considered; out of this population, a simple random sample of 100 were selected and they were asked whether they were willing to participate at the interviews. Meanwhile, the study managed to collect data from 40 respondents who were willing to provide information regarding the sample. Thus, an overall response rate of 40% were received by study.
Random sampling is the best approach which will enable the study to determine an unbiased view of the population represented. Larger the size of the sample, the study will be considerably effective. However, in this instance, key companies in the industry were selected which restricted access to the total population. Meanwhile, due to the absence of a publicly available list of customers who have purchased condominiums, it is advisable to select the large-scale players in the industry. Thus, the selected companies will cover most of the population and the approach used is convenient sampling as the companies were selected deliberately based on the size.
The researcher aims to use data collection techniques by introducing a questionnaire for the survey. Questionnaires: each person is requested to respond to the same set of questions to collate data and fulfil research objectives. The questionnaire consists of questions based on the Likert Five-point scaling. Meanwhile, the questionnaire remains the best approach to collect the requisite information for a study of this nature. Therefore, it is important to note that questionnaires will be the chosen method, to collect data with focus on a quantitative study.
Prior to conducting data analysis, the researcher will check for completeness and accuracy. Following this, all questionnaires will be coded for identification. Both descriptive and inferential statistics will be used for data analysis. Under descriptive statistics, mean, median, mode, and percentage will be used. Under inferential statistics, correlation and regression analyses are adopted. This will indicate the nature of the relationships between the variables. Therefore, the nature of the relationships in this context will be evaluated, to test the hypotheses in consideration.
The regression formula is as follows:
Thus, the above chapter elaborates on the methodology that the study has adopted. The methodology has been developed with a view to mitigate any errors and achieve appropriate results from the discussion. Therefore, the study outcomes will be achieved consistent with the needs of the study and the insights are likely to be significant towards reaching appropriate conclusions. Therefore, the findings of the study and the recommendations will be affiliated with the exact appropriate insights that this could provide and would eventually be consistent with the expectations of the parties.
This is the chapter where the overall findings of the study will be discussed. Therefore, it is important to ensure that the findings of the study remain clear to all parties and they will contribute towards enhancing the conclusions reached by the study. This is the primary knowledge generation aspect of the study as well. Thus, the overall findings will provide useful insights in terms of the discussion and the areas of interest. Meanwhile, the nature of the awareness associated with the various purchasing aspects as well as the overall effectiveness of the purchase decision making are some of the important areas, which will provide useful insights to condominium purchasing behavior of the customers.
This section will highlight the main demographic aspects of the discussion; in other words, the nature of the customers and the details associated with this area require to be identified and discussed. The demographic aspects indicate the nature of the respondents who have participated in the study. Thus, evaluating details regarding the respondents and their respective habits will be useful to reach an in-depth understanding regarding the population adopted for the study. Thus, the demographics section remains vital to identify whether the selected respondents were suitable for the study and whether they were capable, of providing accurate information regarding the study area.
This section will discuss the areas in which the potential customers reside; identifying the point of residency will determine how the houses should be sold. Further, the point of residency will also give you an understanding on whether the customer is purchasing the premises for investment or for residency purposes. Thus, identifying the point of residency remains important and the following chart highlights the details associated with this aspect.
Figure 4.1 –Residency (research data, 2017)
It can be observed, that there is a fair mix of customers who are permanent residents of Sri Lanka whilst there are several residents who hold permanent residency (PR) in other countries as well. Considering that approximately 38% of the investments have been undertaken by residents who hold PR outside of the country, it is important to note that this remains a way of attracting foreign investments to the country. On the other hand, it is also clear that since the prices of the properties remain high, several parties who hold foreign PR will be able to purchase these properties. However, it is noteworthy that of all respondents, approximately 62% represent permanent residents of Sri Lanka and this indicates that condominium related properties are mostly popular amongst the Sri Lankans.
While the PR can be of a certain origin, the location where the parties are living will also require to be taken into consideration when the outcomes are considered. Therefore, it is important to identify whether the people who have purchased these properties are residing in Sri Lanka, since this will confirm whether they have purchased these properties with the view to invest. Thus, the location in which they are residing is also an important indicator, as this will help one understand the benefits that they can derive from these properties.
Figure 4.2 – Living overseas (research data, 2017)
Of the respondents, 33% reside overseas whilst the majority, reside in Sri Lanka. Therefore, it is evident that the properties have been purchased, with a view to living. However, it is also possible that the Purchaser, intends to rent the premises. Thus, the main purpose of purchasing these properties will need to be identified, to understand whether the customers are likely to use them in the future context as well.
This indicates as to what percentage of the customers are renting the apartment; there is the possibility that the customer has purchased the property as an investment as well as consider it as an asset for the parties to utilize. Thus, the apartments could be rented out for an extra income. The following chart indicates the main purpose, for which the parties have invested in the apartments.
Figure 4.3 – Renting the apartments (research data, 2017)
There were three respondents or 7% of the total respondent base who have indicated the fact that they have purchased these apartments with a view to renting. It is important to note that on the other hand 93% of the respondents have stated that they have purchased the premises with a view to residing (not for renting purposes). Therefore, it is evident that the parties who invest in these properties possess different plans. However, collectively they intend achieving appropriate results from these investments.
This section discusses the reasons behind the decisions made by customers, to purchase these apartments. It is important to note that the customers are likely to possess certain plans in place when purchasing an apartment and these plans require to be identified and appropriate steps taken. The following chart indicate the main purposes that are likely to be associated, with the purchase decision of proposed investments in apartments.
Figure 4.4 – Main reason for purchase (research data, 2017)
It is interesting to note that 58% of the respondents have purchased the property with the intention of considering it as an investment as well as utilizing it for accommodation. This highlights that while they seek to live in these properties at present, it is likely that they will consider to encash their investment in the future as well. On the other hand, 30% of the parties have purchased these apartments with a view to residing, whilst only 13% of the respondents have purchased these properties as an investment.
The above findings have revealed several valuable insights namely; the customers primarily purchase these properties with the intention of considering it as an investment as well as for the lifestyle value affiliated with these properties. Resultantly, the primary purpose of purchasing a property of this nature is for accommodation. This naturally indicate that the properties purchased are directly linked with the lives of the residents who are living in these properties. This will ensure that the parties will be able to achieve appropriate benefits and maximize the results. Since the purpose of the purchase is clear, it is important that the suppliers of these properties take into consideration these precise requirements of the customers when developing the property, and ensure that the customer benefit as well as other parties involved. Thus, the outcomes are likely to be considerably useful for the parties concerned, to achieve appropriate outcomes in the future.
This section discusses the level of affiliation each attribute possesses, based on the knowledge that the customer has on each area. Meanwhile, it is considerably important that necessary information is adequately made available to the customer, enabling them to make an appropriate choice, when selecting a property. The following areas should be considered as some of the salient points to be evaluated, prior to reaching a decision.
The customers need to be aware of the total charges involved with the purchase of an apartment; it is evident that there are several charges that will occur monthly as well as annually when a person purchases an apartment of this nature. The parties require to be conversant of these charges and understand how they are likely to impact them. The following chart displays the level of awareness a customer is likely to possess, regarding charges associated with the purchase of an apartment.
Figure 4.5 – Level of awareness (research data, 2017)
The above chart indicates that 75% of the respondents were unaware of the extra charges associated with the purchase of an apartment. This is likely to be an issue, since the customer will be dissatisfied regarding the extra charges that are associated with the investment. Approximately, 18% possessed limited knowledge, regarding the charges that were involved, with these investments. Thus, the awareness levels regarding the extra charges remained considerably low.
Most parties purchased these properties with the intention of using it for accommodation. Therefore, it is essential that they possess a clear understanding regarding the construction standards involved with the construction process and how these attributes have contributed towards ensuring that the lifestyles of the people are improved. Therefore, it is necessary that the proposed purchaser obtains a clear understanding of the relevant quality standards and ensure the contractors have adhered to these parameters.
Figure 4.6 – Awareness of quality standards (research data, 2017)
Of the total respondents, 77% have stated that they were unaware of the quality standards. Meanwhile, only 16% have indicated that they were aware of the quality standards and they were concerned regarding these quality standards at the time of purchasing of these apartments. Therefore, this issue is considered a problem area.
This is another important aspect; when a person is living in a condominium, there are several families who live within the same facility. Therefore, to live amicably, peacefully, and comfortably without being a hindrance to the rest of the families, there are certain main rules which require to be adhered to by each party. Thus, it is mandatory that these rules are complied with by each party. Meanwhile, there are certain statutory provisions that the parties require to comply with as well. All these aspects are important when living in such environments. The following charts indicate the main details.
Figure 4.7 – Awareness of laws, regulations and compliance requirements (research data, 2017)
Chart 1 indicates the awareness levels regarding applicable laws and it is apparent that approximately 77% of the total respondents are unaware of the laws associated with this area. This can be considered as a significant issue which requires appropriate attention. Likewise, when the regulatory aspects are considered, approximately 80% have indicated their lack of knowledge on these aspects. Therefore, it is apparent that the proposed Purchaser is ill-equipped to reach a reasonable decision, since their knowledge of legal as well as regulatory aspects are considerably poor.
Once the customers have purchased the apartment, there are several services that they are entitled to receive from the supplier of these apartments. It is important that appropriate steps are undertaken to provide the customers with apartments which are consistent with the needs they possess. The following charts depicts the nature of the after-sale services that the customers are likely to receive from the property developers.
Figure 4.8 – After-sale services (research data, 2017)
It is interesting to note that in this instance approximately 77% of the respondents were unaware of the mechanisms of how the property is managed. Resultantly, most of the apartment owners have purchased the property without possessing a proper understanding on how the property will be managed. This is a major issue which the parties require to address. On the other hand, approximately 82% of the respondents have indicated that they were unaware of the persons who are responsible in managing the property. Thus, the above charts indicate that the customers have a low level of awareness regarding important issues.
The customers require to ensure that the building they are going to occupy conform to the appropriate building standards. This will ensure that they are positively impacted, since there is an assurance that the building has been constructed as per appropriate guidelines. This in other words indicate the fact that the overall reliability of the building systems requires to be understood by the customer, to ensure they are living in appropriate and secured spaces.
Figure 4.9 – Awareness of the reliability of the building systems (research data, 2017)
Of the total respondents, approximately 80% have stated that they strongly disagree with the fact that they are sufficiently aware of the warranties that are available with the buildings and the systems that are fitted. This indicates that most customers are unaware of the benefits affiliated with the warranty systems available and how they will be able to benefit from these systems.
There are various critical equipment that are available in the building; for instance emergency water supply, security related aspects as well as power supply related aspects are some of the areas. The customers therefore need to ensure, that they are fully aware of the availability of these equipment, which will enable them to utilize these facilities when necessary, due to any issues that they are likely to face with the building. The following chart indicates the details.
Figure 4.10 – Awareness of the critical equipment (research data, 2017)
The above chart also indicates that the awareness levels regarding these equipment remains low, amongst the property owners. This means that the customers are unconcerned regarding this equipment availability and the placement. This is considered a major issue, since in a case of threat or emergency, the apartment owners will be unable to take timely action, as they will be unable to identify the placement of these equipment and implement appropriate steps to meet the emergency.
It is important to note, that customers need to be aware of by-laws that govern certain types of behavior to ensure that the residents behave in an appropriate manner. Further, there could be house rules that have already been formulated as well. These aspects require to be identified and appropriate measures taken to ensure that the customers are aware of these laws and rules. This will enable them guarantee that the environment is conducive for living to all residents.
Figure 4.11 – Awareness of house rules (research data, 2017)
It is also important to note that the awareness of house rules was also low since approximately 77% of the respondents were unware of the house rules governing condominiums that they have selected to reside. This is a major issue, since the parties will be unable to live in an appropriate manner in such an environment due to problems they are likely to encounter, owing to the lack of awareness. Therefore, it is considerably important to address this area and enhance the knowledge of the customers regarding house rules that they require to adhere, when residing in condominiums.
The potential customers require to be fully aware of the responsibilities of the MC and the nature of activities affiliated with this entity. Resultantly, this will enable them to ensure that proper controls are implemented, for a successful management of affairs of the community and guarantee superior living conditions to the residents. This aspect is considerably important, since the residents live in close proximity, and therefore it is necessary for appropriate systems to be introduced, to manage the facilities for the benefit of all.
Figure 4.12 – Management Corporation responsibilities (research data, 2017)
Most respondents were clearly unaware of the role of MC; and ignorant regarding the activities of the condominium property developer, who is positioned to manage the issues and the affairs of the complex appropriately and offer beneficial outcomes to the residents. Thus, the overall role of MC is another key area that the parties should address and improve their knowledge.
The parties require to be fully aware of the recreational facilities available to them. These might include the facilities of a pool, gymnasium and other such appropriate activities, that the customers are likely to benefit from. Therefore, it is important to ensure that these facilities are designed to cater to the needs of the customers and ensure that they are aware regarding these activities and accessibility. If the customers do not possess the requisite knowledge to select these facilities, they will be unable to benefit from the value addition these facilities can offer to their existing lifestyle.
Figure 4.13 – Recreational facilities that are available (research data, 2017)
Of the total respondents, approximately 77% have stated that they were clearly unaware of the recreational facilities that were available to them. This is one of the main reasons that they might not be able to maximize the benefits, from living facilities of this nature. Thus, lack of knowledge regarding recreational facilities requires to be taken into consideration and the parties should work to improve the knowledge of the potential customers on these areas as well.
It is vital that the parties are aware of the common facilities that are available to them. There are several common facilities which the parties are entitled to under the maintenance fee they contribute towards. Therefore, being aware of these facilities and utilizing them, will ensure that they benefit from these activities and enhance their lifestyle.
Figure 4.14 – Awareness of the common facilities (research data, 2017)
When common facilities are considered, a similar situation is observed, where the knowledge levels of the customer are considerably low. This highlight, that the customer has not even considered the common facilities that are available to them nor, has this aspect influenced the purchase decision, when purchasing a condominium unit of this nature. Therefore, this area requires attention and appropriate steps need to be introduced to improve the overall awareness.
To record scores, the Likert scale was used; in this instance, the following scoring system was used to provide results for each statement.
Table 4.1 – Likert score system (Malhotra, 2007)
Based on the above scoring system, each attribute has achieved a result. The following chart indicate the average scores that has been achieved by each attribute.
Figure 4.14 – Attribute scores (research data, 2017)
The average score for all awareness aspects records 1.61; this indicates that the overall awareness related to apartment units and building aspects remain considerably low. Meanwhile, the customers have not taken these important aspects into consideration, when they have purchased apartment units of this nature. This can be considered a major issue since the customers show lack of awareness of these important aspects, when they have considered the purchase of an apartment of this nature.
This is the dependent variable that will highlight the effectiveness of the purchase decision. The customers will expect to maximize the value they receive from the purchase they undertake. All the factors that they are considering should conform to these requirements. It is very important that the project is positioned to supply appropriate values consistent with expectations. The following chart indicates the details.
Figure 4.15 – The return on investment (research data, 2017)
Of the total respondents, approximately 35% of the respondents stated that they either agree or strongly agree, that they were aware of the return on investment they are likely to achieve, at the point of purchasing the apartment. However, another 42% have stated that they possessed minimal knowledge regarding the values they would achieve from purchasing an apartment. This indicates that most customers were unaware of the value of the investment and the nature of the returns that the investment would generate for them. This is an area that is of importance and displays that the customers are quite ignorant regarding the return generating capability of their investment.
In order for the study to be reliable, there has to be an appropriate level of consistency and integrity on the responses provided by respondents. Cronbach’s alpha is the best approach that should indicate the reliability of the data collected. The overall score is 0.972 in this instance. This shows that there is an overall high level of data integrity associated with the study. Thus the reliability of the study outcomes are high and
Meanwhile, it is important to evaluate the nature of the relationship between the variables in the study context; therefore, to identify such relationships, it is recommended to undertake a correlation analysis. This should indicate the nature of the relationships between the variables in consideration. Therefore, the correlation scores should highlight the nature of the relationships which exist between the variables in place. the following table highlights the correlation scores.
|Management after purchase||0.451|
Table 4.2 – relationship analysis (research data, 2017)
The above scores would indicate that the independent variable possess a significant and positive correlation with the dependent variable in consideration. The SPSS analysis has indicated that in each of the instance, the nature of the relationship between the variables are strong and positive. This means that with the increase in overall awareness, the effectiveness of the purchase decision is likely to increase. This has been clearly identified through the above table. This knowledge can be used to test each hypothesis that has been developed at the initial stage of the study.
The regression analysis has provided the following
|Model||R||R Square||Adjusted R Square||Std. Error of the Estimate|
Table 4.3 – Regression analysis (research data, 2017)
The above data shows that in summary, there is a clear relationship between these variables. Thus overall regression indicates that all these variables contribute to driving of the best return generating capabilities linked with the customers.
|H1=There is a positive impact of Awareness of Charges on effectiveness of the purchasing choice of condominium buyers.||Accepted|
|H2=There is a positive impact of Awareness of Construction Quality Standards on the effectiveness of the purchasing choice of condominium buyers.||Accepted|
|H3=There is a positive impact of Awareness of Regulations, Laws, Compliance and Governing Bodies on the purchasing choice of condominium buyers.||Accepted|
|H4=There is a positive impact of Awareness of Administration and Maintenance on the effectiveness of the purchasing choice of condominium buyers.||Accepted|
|H5=There is a positive impact of Awareness of Accounting and Managing Methods on the purchasing choice of condominium buyers.||Accepted|
|H6=There is a positive impact of Awareness of Warranties and Guarantees on the effectiveness of the purchasing choice of condominium buyers.||Accepted|
|H7=There is a positive impact of Awareness of Critical Equipment on the effectiveness of the purchasing choice of condominium buyers.||Accepted|
|H8=There is a positive impact of Awareness of House Rules (By-Laws), and Health/Safety/Security on the purchasing choice of condominium buyers.||Accepted|
|H9=There is a positive impact of Awareness of the Role of the Management Corporation on the effectiveness of the purchasing choice of condominium buyers.||Accepted|
|H10=There is a positive impact of Awareness of Vehicle parking and Recreational/Common Facilities on the effectiveness of the purchasing choice of condominium buyers.||Accepted|
Table 4.4 – hypotheses test (research data, 2017)
Thus, the above analysis indicates that each factor that is associated with the purchase decision making process is considerably important and will contribute towards enhancing the overall effectiveness of the decisions that the customers are likely to undertake. Therefore, the overall need for such aspects in place remains vital for the success of the outcomes.
The above discussion highlights the closeness of the relationship between creating awareness and the effectiveness of the purchase decisions, based on the new knowledge. Therefore, in other words the above ten independent variables will contribute towards enhancing the overall effectiveness of the decision-making capabilities of the parties. The outcomes in this context highlight the fact that the overall improvements experienced in awareness of these areas remain considerably important. However, it is also noteworthy to acknowledge that the level of awareness of these aspects remain low and necessary measures require to be implemented, to increase the awareness levels of the prospective buyers.
This chapter will conclude the above findings of the study; the study was developed with the intention of understanding the key areas that the customers need to be aware, to reach effective decisions when they are purchasing condominium related properties. The study has been able to identify several useful aspects which contribute towards the development of the sector in the future.
There are several areas that customers require to consider, when they are purchasing a property. Purchasing of an apartment in a condominium is a long-term decision and the customer needs to undertake in-depth evaluation, when considering the facts which influence the decision making. Meanwhile, the study was seeking to identify, whether the customers were evaluating the salient facts, which impacted the decision-making process. These features included; the awareness of the charges involved, awareness of the quality standards associated with the premises, laws and the regulatory framework in place, who and what management structure is available after purchasing of the property, reliability of the building and the systems, critical equipment availability, house rules and the by-laws, common facilities, Management Corporation responsibilities and recreational facilities. It is important that the customers are aware, of the need to evaluate these areas prior to reaching an appropriate decision to purchase this type of property. However, the study has managed to conclude that due to the low levels of awareness amongst the customers regarding these salient points which require to be considered prior to reaching a purchase decision, the overall effectiveness of the decisions reached, have been considerably low. Further, the study had provided useful insights to prove that the above discussed ten independent variables bear a positive and significant correlation in terms of effectiveness. This is the main aspect that highlight how beneficial it is to the parties concerned. Therefore, for customers to undertake appropriate decisions, it is paramount that they are fully aware of the salient points which influence the decision-making process, which will ensure that the decisions made are beneficial to the customer. Meanwhile, the decisions currently undertaken have been reached based on a low level of knowledge in terms of prominent factors. Thus, appropriate steps require to be implemented by the property developers to enhance the awareness levels of the prospective buyers regarding the important areas, which the buyers need to consider prior to reaching a decision, which will lead towards appropriate outcomes in the long term.
Kotler (2004) has identified that when a potential customer requires to undertake a purchase, they would seek to evaluate the applicable information. Resultantly, the customer will attempt to understand, whether the product he envisages to purchase, suits his requirements. In case that this information provided do not match the item that the customer would purchase, it is likely that the customers will be dissatisfied with the purchase that they have made. Meanwhile, Kotler (2004) has also identified that there are several types of purchases and in this instance, the purchase of an apartment facility is naturally a complex purchasing decision. This is an area where the parties need to be fully aware of all salient factors, which are likely to influence the decision, to ensure that the appropriate result is reached. In general, the demand for condominiums are increasing as a solution to the Management of city space due to increase in population as well as urbanization. Likewise, increased levels of income (disposable income) of society, also has a bearing on the demand for luxurious living space. Therefore, property developers will need to ensure that the structures cater to the higher demand in luxury. This highlights that the sector will continue to grow and gain an advantageous position in the future. Therefore, it is important to ensure that the condominium builders and other stakeholders acknowledge this requirement and work together to ensure that the solutions they provide, can cater to the needs of the prospective buyer. This will maximize the benefits to all parties involved.
It is apparent that the customers need to take several steps to ensure that the building that they intend to live, conforms to the requirements they envisage. For this purpose, they need to evaluate the following areas.
- The customer should insist on checking the approval received by the Colombo Municipal Council (CMC), Condominium Management Authority (CMA) and Urban Development Authority (UDA).
- It is important that the customer identify the type of the project (Pure Residential/ Mix Development/Service Apt Concept). The approval should have been received and should not be pending for any of the aspects.
- The customer needs to check and evaluate the credentials of the parties such as the contractor of the project and the consultants. It is also important to identify the project lawyers and the bankers involved. This will indicate the strength of the parties involved.
- Appropriate attention should be given to recreational as well as common facilities that will be available. This will reflect the overall value that they are providing to the living environment of the customers in the future.
- The customer requires to evaluate the likely charges which will be applicable as well as understand the capabilities of the parties responsible in maintaining the facility; this will enable them to identify the precise types of facilities that will be available, and how the parties will be able to use these facilities appropriately.
- The customer requires to pay attention to the quality of the structure, security and other systems which are significant areas related to the construction. Meanwhile, it is essential that the available warrantees cover the requirements of the buyer.
- Likewise, the management of these properties need to ensure that they provide all relevant information regarding the facility to the proposed customer, which will enable the prospective buyer to evaluate from all angles and reach a sound decision.
Thus, the above steps will ensure that the customers are positioned to purchase a property, which will meet their requirements. This will enable them to ensure that the outcomes conform to the expectations and the benefits are maximized. This will determine the future growth of the industry.
Thus, the above discussion related to the study indicates the importance of undertaking an appropriate approach, when selecting a suitable property which meets the needs and expectations of the prospective buyer. The customers require to select a property, which will suit the needs they envisage to fulfil. The lifestyle they envisage to maintain, plays a significant role in the purchase as well as other such areas of importance. All these aspects indicate that they will need to ensure that the appropriate type of property is selected to meet their respective needs. Meanwhile, the study also highlights, that there are several areas associated with a condominium facility, which requires careful consideration prior to reaching a decision, as this will ensure that they maximize the benefits by making an appropriate decision. Therefore, the above discussions highlight the importance of undertaking correct decisions, since this will ensure that appropriate results are reached consistent with the needs of the buyer which will subsequently cater to the growth of the residential real estate industry.
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