Question:
What are the barriers to entry for real estate development?
Barriers to Entry:
Barriers to entry mean that there are factors that will prevent a firm from entering an industry. They do not exist in a pure and monopolistic type of competition. However, both monopoly and oligopoly have barriers to entry. This can be in the form of economies of scale and marketing barriers, among others.
Answer and Explanation:1
Some of the barriers to entry for real estate development are capital or investment, regulations, and experience. Developing land for real estate, regardless of use, requires a large amount of capital to see it through from inception, construction, and sale. Some areas or countries have stricter regulations for building new real estate than others, so this can keep some companies from entering the market. Finally, experience refers to being able to enter the market successfully. Without being able to market themselves to potential buyers well, a potential entrant faces little to no demand for their services.
