Introduction

A business is any process that fulfills human needs and wants. Many housing types are totally at odds
with how people live today besause people don’t have as many material goods as they used to. Economics
studies the ways that human beings ( individuals or societies) allocated their limited resources to satisfy
their unlimited wants. This article is discussed in terms of real estate, and is of economical importance.
And also Entrepreneur is a person. He has a some valuable tasks. It is
i. Production task to organization
ii. Taking decision about business policy
iii. Risk acceptance
iv. Introduce the innovation

This report is based on a talented entrepreneur. His business is a Land Sale company. This report has
described about the background of company, what is the current status of the company, tasks of the
company, their business process. The main object of this report is to analyze the issues of this
organization. Discussion have been made with regard the company’s demand and supply determinants
and the key current issues that the company must address. And also discussed about the problems
employee issues, how affect inflation for business and other issues. And I have discussed some wellness
of the company and the right methods to use according to economics theories.
Background of the company
Many housing types are totally at odds with how people live today besause people don’t have as many
material goods as they used to. We can see that market and societal demands are pushing people towards
sharing space, but many co-diving arrangement do nothing to improve housing affordability in the long
term.
This Company has been started in 2014. This has been intiated by several interested investors in real
estate.Real Lands and Properties (Pvt) Ltd, is a real estate company incorporated in Sri Lanka, which is
engaged in the business of acquiring, developing with value addition and selling lands to corporate and
individual customers. First Land project commenced in Polgasowita, named REAL POINT

When they start this, they have a capital problem.They have obtained bank loans for this purpose.And this
has begun to be a small group of ten employees at started time. Accordingly, business has been carried
out. The company was originally known as the JMT Real Estate (Pvt) Ltd and a name change has been
done with the new name as the Real Lands and Properties (Pvt) Ltd before the very first project launch.

The following diagram depicts their extensive portfolio of services;

Customer
Financial
Customer Legal solutions and
advisory services services
Marketing, Sales & support
& customer
Land relationship
Development management
Regulatory and the provision
approvals and of utilities
Real Estate Due permissions
diligence and
acquisition
Current Situation and Key Information

Company Name and appearance :

Address : 167, Main Street, Battaramulla, Sri Lanka

Business Registration Number : PV 95284

Contact Information : Email Address:info@reallands.lk
Tel/Fax : (+94) 011 2 053 355
Hot Line : (+94) 071 5 600 400
Web: www.reallands.lk
Vision : To deliver the highest value in the real estate industry
through innovation and integrity.
Mission : To deliver professional Real Estate sevices, Housing
solutions and lixury lifestyle services which are a class
apart; through innovation and integrity, towards become\ing
the most respected real estate company in Sri Lanka
Company Positioning : Real Lands and Properties (Pvt) Ltd has been positioned
within the top 10 real estate companies in Sri Lanka from the
inception by maintaining the land development standards
and all marketing activities. The company was conferred
with a GOLD award at the Mass Communications
Association of Sri Lanka (MASSCO) 2016 Awards
ceremony for its achievements within such
Hatton National Bank
Pan Asia Banking Corporation
DFCC Bank
Nations Trust Bank
Sampath Bank

Auditors : KPMG
No 32A, Sir Mohamed Macan Markar Mawatha,
P.O. Box 186,
Colombo 00300
 Sri Lanka

How to affect inflation for Land Business

He said that Inflation period advantageous their business tasks. Inflation is an increase in the
average price of goods and services in some time period. In particular, the real value of the
currency is damaged in the event of inflation. That is, the amount of goods that can be bought is
reduced. Accordingly, the real interest rate for investments and savings decisions is taken into
account. Accordingly, invest to peoples money in the bank, they have a disadvantages. Because
they invest to the bank they can take some small bank interest , but they can't buy lots of goods
and services. There fore people likes the invest in the another route. Therefore, people are trying
to invest in land and other ways. They know that land price are not decrease, therefore they can
sale or some business can be done and they can be take profit in the future. Therefore, it is tring
to buy more property for inflation period. Therefore the rate of inflation for real business is
advantages. He said that their land is more sales in the inflation time.

They use to IT software & Accounting Software for their accounting work

They conduct their accounting work through regular accounting system. For that purpose
They use to IT software & Accounting Software for their accounting work. It can maintain accounting
functions accordingly,
Factors of The Land Demand

There are several factors which affect the demand of the customers. The following factors
directly affects the demand of the land. To increase profits and income, a business has to pay
attention to these determinants. There are

1) Land price
 This is the not main factor of land demand. Because the demand is determined by the property
quantity of perch and caustomer needs. But price determines much more. Buyers first consider
own needs after property prices. He said that price was quite important factor.

2) Changes in the area

He said this was a very important factor. Because With urbanization, the value of land in city and
rural areas varies. Lands close to the city are expensive and when it goes to the rural level have different
price.
3) Future prospects

On the buyer’s expectations, the demand for property varies. That is, they are looking forward to a future
job and their social environment.

4) Price of other goods

That is,the price of other real estate and the prices of flats are the price. Accordingly, the demand is
varies. It is Price of substitute goods and Price of complementary goods.

5) Income of the customers

He said consumer revenue is an important factor in this. That is, those who receive
high income tend to get land. That is, when you increase your income, you tend to
buy land, and there is no incentive to buy land when the income is low.

6) Amount of facilities provided for lands and other factor

There are water and electricity facilities. Near the city. Easy access to school and mall. The environment
and the natural environment. Geographical location of the area. Flood landslides the possibility of such
natural disasters. Legal conditions. Easy to build a house and the ability to get raw material.

After he said this factors. That is, the demand for property is not determined solely based by the price.
That is , the demand for property is slowly responding to the price change. They also use this point to
determine price. In economics, they consider price elasticity. They have used price elasticity as follows.
He said that, studying the exent of the land sale in relation to price increases or reductions. That is, real
estate business is have inelastic demand. If the price varies a lot, the amount of the demand varies from
slowly.
inelastic curve

price of perch

Quantity of perch

Price of substitute goods

This factor is a factor in land demand. It calls another product that can be used instead of using land. In
this case people can invest in other instead of investing in land. Instead of buying land, a good example is
buying flats home. This is often seen today. That is, instead of buying land they are buying flats. This is
the main substitute. In addition, they can invest in vehicle, share market, house, apartment, saving and
fixed deposits.
Related land can be substitute goods and complimentary goods. When, the price of the
substitute of the given land rises, the demand for the given land also rises. Whereas it decreases when the
price of the substitute goods falls.

Price of complementary goods

This factor is a factor in land demand. Other items that need to be used for land use are complementary
goods. There are also complementary products for land. These are, if we consume land, we need Water,
electricity, Convenience for the city to access the market and houses.
The opposite relationship exists
between the price of complementary goods and the quantity demanded of the product being considered.
So the demand for lands is reduced when it is most expensive to purchase electricity and water.

Calculation of the cost of a land, income and profit

He said that the cost calculation was very complex. Cost of production is a financial value of all the
factors that are dedicated to the product of production. Real estate costs are very high. There are several
types of costs. These are, Purchase Considaration, Development, Land Preparation, Land
Development(Drains & Tarring), Legal & Other Exp, Legal Fees & Stamp Duty, Plan App,Tax & PS
,Charges etc, Water & Eelectricity, Electricity, Water, Advertising Expenses, Advertising, Finance Cost.
Healso said that the calculation of the cost is a fundamental part of this. When determining prices, the
more you consider the cost of the land. According to economics, man has two sets of fixed costs and
variable cost. He said that most of the compensation for the development of property is spent on money.
They calculate the cost of their property trading business as follows.

Akuregoda
Particulars
Budget Actual/Est Variance

Purchase Considaration 61,750,000 61,750,000 -

Development

Land Preparation 3,675,000 3,344,850 (330,150)

Land Development (Drains & Tarring) 1,960,000 1,897,175 (62,825)

Legal & Other Exp

Legal Fees & Stamp Duty 2,777,750 2,863,780 86,030

 Plan App,Tax & PS Charges etc. 1,750,500 933,882 (816,618)
Water & Eelectricity

Electricity 750,000 682,923 (67,077)

Water 500,000 272,245 (227,755)

Advertising Expenses

Advertising 1,800,000 551,970 (1,248,030)

Finance Cost

Interest 5,619,250 1,578,786 (4,040,464)

Total Cost 80,582,500 73,875,611 (6,706,889)

The above expenditure can be divided as follows into economics. It is two sets of fixed costs and variable
cost. And also we can calculate different types costs. There are ..
i. Average variable cost (variable cost Per Perch) = total land variable cost / quantity of perch
ii. Average fixed costs (fixed cost per perch) = total land fixed cost / quantity of perch
iii. Average costs (cost Per Perch) = variable cost Per Perch + fixed cost per perch

Average costs (cost Per Perch) = Total property cost / quantity of perch

Opportunity cost

Opportunity Cost = Return of Most Lucrative Option - Return of Chosen Option or

Opportunity cost is the forgone value of choosing to use one thing ( or a resource) for a
particular purpose. It is the value of next best-forgone alternative or the value of the best
alternative surrendered when choice is made.

The opportunity cost of this business will depend, because cash used for land trading they can
this cash used to another investment and earn the profit that investment. Therefore this
company have a opportunity cost.

Direct and Indirect cost

Direct cost to this business is the cost of purchasing land and developed cost of the land. Indirect
cost is this company Legal Fees & Stamp Duty and Tax and PS Charges etc.

Real Estate Business Are Oligopolistic institute

According to economics, market behavior identifies four major markets. There are Perfect
competition, Monopoly, Monopolistic competition and Oligopolistic institute. Accordingly, real
estate belonges to the category Oligopolistic institute. There areseveral features of the real estate
business. There are …
i. Obstacle have for new businesses to enter the industry.
ii. Be able to count the number of companies that compete in the industry or minor
numbers of competitors
iii. Confirmation of market dominance

This analysis is also important to determine the price. There are a limited number of competitors
for real estate business. He introduced his own business competitors. There are Home Lands,
Blue Mountain Properties, Prime Lands Group (Pvt) Ltd, Araliya Lands and Homes (Pvt) Ltd,
Guruge Property Sales (Pvt) Ltd, Prime Lands (Pvt) Ltd, Blue Mountain Properties, Skyline
(Pvt) Ltd, Gangani Land Sales, Lucky Homes (Private) Limited, Tharanga Lands, Latitude Lands
(PVT) Ltd, Access Tower II, Regent Living (Pvt) Ltd, Blue Sky Lands & Homes (Pvt) Limited.

Factors of The Land supply

As well as demand, supply is the most affecting factor for the profits. In related to supply of land for this
organization, mainly we can identify the issues regarding the following factors.There are several factors
that affect the supply chain of this business.These are as follows. Number of supplies, Manufacturer’s
expectations, Government policies and Price of production factors. They are provided with lands in
various areas. They provide property on a variety of different needs of each individual. There are plenty
of land in the vicinity of the town as well as for the countryside.
Determining Price
Determining the price is very important for business. Their main income is sales in property. Determining
prices must be done with responsibility. Therefore requires studying price elasticity and competition. He
said us that the price was determined by cost. Price is determined by adding cost per profit. In addition,
there are several things that need to be considered when deciding the price. There are Price of other
salesman, Location of the land, Quantity of facilities provided for the land and other.
In addition, taxes are included. These taxes are levied by the government. Accordingly, a number of taxes
are levied. These are Capital taxes, Capital gain tax, Value added tax is charged for the development
value of the land, Stamp duty is charged, Assessment tax, Sales tax in addition, when the land is sold, one
per cent of that income is levied by the, local council. Accordingly, the government collects various taxes.

Issues that facing the Business