Property Valuation Estimation Factors
- November 7, 2023
- Buying Guide, Property, Real Estate
- cost of properties, current real estate market conditions, Property valuation, Property valuation Estimation Factors, real estate market
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Property valuations have taken a shift for the better – proves the recent real estate statistical data of India. This shift owes to the growth momentum being provided by important factors such as demographics, location, etc. Correct insights of the factors may help the investors predict the best time for the purchase of property, price inflations, recessions in the real estate market so that they will always be on the safer side.
These include quality of location, topography, climate, water availability, proper sewage facility, etc. More and better the facilities, the higher the price of land. Furthermore, topography has a direct effect on the cost of construction. Thus, it affects the overall development cost of land.
Location is one of the prime factors considered while evaluating a property in India. Properties that are located in commercial areas call for higher price appreciation than the residential areas. Buildings or properties in well-developed areas with good infrastructure demand higher prices than properties that are located in under-developed and developing areas. Adding to it, buildings on freehold land get a substantial property valuation than the ones constructed on leasehold land.
Infrastructure and transport linkage
Properties that are proximal to well-developed infrastructure like roads, flyovers, airports, malls, industries, etc would get faster price appreciation than those which are farther from such infrastructural facilities.
Transport linkages are also very important since they govern the mobility & ease of movement to and from the area. Clearly defined hierarchy of roads, efficient public transportation, and spacious roads are some of the significant transportation attributes of any area. Residential asset values are also observed to be in direct proportion to the hierarchical order of the adjoining road.
Commercial real estate zones
The development of malls, IT offices, and special economic zones close to residential areas help in cutting down the time and energy wasted in traveling to workplaces and due to such convenience, people might choose to live in such areas and hence due to demand, there’d be an increase in the price of real estate in the area.
The cost of properties is also affected by the facilities available in the neighborhood of their sites such as shopping areas, medical facilities, schools, parks, playgrounds, and other basic needs of humans. The reduced travel and trip distance will directly contribute to the monetary benefits of the person staying in an area with many such facilities in proximity.
Home size and usable living space
The features and overall size of properties will affect their value. When considering a home’s market value, size and usable space are important factors to consider, since a bigger home can undoubtedly change its price valuation. Added features such as extra bathrooms, garages, swimming pools, and outdoor recreational areas can all have an impact on property value.
Age and condition
Generally, residential properties that are newer and innovative sell at higher prices. As the important parts of the house, like plumbing, electricals, the roof, and appliances are brand new, they have very fewer chances to cease functioning. So, despite the initial high cost, it will save the maintenance cost on the buyer’s end. And also, it’s important to note that well-maintained older homes can also sell at a higher price.
The cost of real estate becomes higher in the case of builders undertaking customization demands of residential space on the lines of the purchaser’s requirements. For instance, some investors may want verandahs attached with their apartments, upgraded kitchens, specially designed internal staircases in duplex apartments, higher-quality paint and flooring, woodwork, or other user-specified changes. This leads to an increase in the final effective charges on the buyer’s end.
As major cities are huge business hubs, they attract an enormous number of people to them. A growing population means an escalation in demand for residential properties. These demographics not only affect property prices but also the types of properties in demand. Major changes in demographics can influence real estate trends for a really long time. Keeping an eye on changing demographics will help investors and buyers estimate the desirable real estate investments even before they start to become trends.
Demand and Supply
With the significant demographic changes in the cities with time, the requirement for land also increases. And with the increase in population, there is an increase in economic and other activities as well. This directly enhances the demand in the land components.
The current real estate market conditions certainly have an effect on the property’s value. For example, if there’s a scarcity of available houses in an area and that specific area is high in demand, such circumstances further push property prices even higher in that residential area.
These factors have a high potential to either increase or decrease a property’s value. Therefore, it becomes very important for investors to be aware and keen on them so that they can make an intelligent choice while buying or selling a property.