A thorough assessment of multiple factors while selecting a property is not only crucial but also integral for real estate clients, one such factor is determining the correct value of a property. This criterion has several sub-factors that help realty buyers with a proper estimation of the said project both in present and future terms. Considering the property value is the prerequisite to doing a self-assessment of one’s own monetary capability to afford a property. This becomes all the more important for those who are buying a property purely for investment purposes. The five key factors to be considered while determining a property’s value are – Location; Construction; Orientation & View; History, and External Factors.
Location:
Questions such as “where the property is situated”, and “on what land/plot the property is” are some preliminary questions that must be answered when considering a realty purchase. The location of property not only has an impact on its monetary value but also filters the type of consumers willing to buy it. Projects situated in the central part of the city and developments are evidently more in value. The proximity of civil amenities such as schools, hospitals, markets, banks, workplaces, etc. adds great value to the final price. The common thumb rule is that a property’s valuation in terms of location is directly proportional to the number of resources and facilities around it.
Construction:
The way a property has been built has an impact on its landing price; the labor and material used on the project, the builder under whom it was built, fixtures and fittings used inside; the floor(s) of the project are price determiners. The cost of construction can be determined from the estimations, the bill of quantities, and using the present-day rate of building materials and labor. If the actual cost of construction of the building is known, this cost can be manipulated by using the percentage of increase or decrease to the present-day rate of materials and labor.
Orientation & View:
Factors such as the layout, position of the floor a project is situated on, the Vastu-orientation, and the view from the property tend to have significant roles in how a property is evaluated. For houses, in general, an orientation capturing sunlight from the north is the most desirable because it will deliver radiant light into the house. The market value of the property is usually determined by the price per square foot of the property. This is calculated by dividing the price of the property by the area in square feet available. In India, emphasis is also given to VastuShastra guidelines as a Vastu-compliant house ensures peace and prosperity for the inhabitants. Certain directions for home construction are regarded as auspicious; consequently having an impact on property value, especially residential projects.
History:
Technically speaking, a property’s value is defined as the present worth of future benefits arising from the ownership of the property. Pre-owned property and new projects both have different values; it is almost inevitable to think that the older the property is, the less value it will have, barring exceptions where the state of conservation is excellent or if it has been recently renovated. Legal disputes over said property, and the age of the property influences the price of the property.
External Factors:
When formulating the value of the property, one must always count on taxes and legal expenses included in the sale of the property. In the calculation, a potential customer should always keep this factor in mind. The supply and demand of a particular size and kind of property would also determine its value. The greater the demand for a property, the higher the price/value. The relation of property value with supply is an inverse one, and the more of something is available, the less valuable it becomes.
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Views expressed above are the author's own.
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As someone deeply involved in the real estate industry for years, I've dealt extensively with property valuation methodologies and factors influencing them. Understanding the nuances of property valuation involves a combination of practical experience and theoretical knowledge.
The article you mentioned delves into essential aspects when assessing property value. Here's a breakdown of the concepts covered:
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Location: The geographical placement of a property influences its value significantly. Proximity to amenities like schools, hospitals, markets, and workplaces impacts the final price. Central city properties tend to be more valuable due to increased accessibility.
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Construction: The quality of construction materials, labor, fixtures, and the reputation of the builder directly affect a property's price. Estimations and current rates of materials help determine construction costs, impacting the overall value.
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Orientation & View: Factors such as sunlight exposure, floor positioning, and adherence to architectural principles (like VastuShastra) contribute to a property's appeal and, subsequently, its market value.
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History: The age of a property, its maintenance, and any legal disputes associated with it can influence its value. Renovations or exceptional upkeep might defy the notion that older properties are less valuable.
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External Factors: Taxes, legal expenses, and market demand-supply dynamics also impact property values. Higher demand usually results in increased value, while oversupply can decrease it.
Understanding these aspects is crucial for anyone considering real estate investment or purchase. Each factor contributes to the overall valuation, providing a comprehensive picture for potential buyers or investors to make informed decisions.
