05/04/2023
7 Factors That Determine a Property's Value
From location to size, various factors affect a propertyβs value. These things can either increase or decrease the propertyβs worth. If youβre looking to buy or invest in real estate, here are some valuation factors worth knowing.
1. Locationβ
Location is one of the most important factors that impact a propertyβs value. Properties close to areas with high foot traffic usually have greater chances of appreciation. Likewise, the more accessible a propertyβs location is, the more valuable the property is.
Is the property close to restaurants, schools, hospitals, or the city center? Are gyms, shopping malls, parks, and other attractions found in the area? If yes, then thereβs a great chance the property will have a high value.
2. Developmentβ
A property situated within the vicinity of areas being improved and developed is more likely to have a higher value compared to one located in a remote neighborhood. This is because developments tend to attract more population, which means higher demand for residential and commercial real estate.
As a home buyer or real estate investor, you have to think about future developments that can make your property more attractive to the general population, as this will play a major role in determining its value. You have to think that you are investing in the potential of the property and its surrounding areas.
3. Accessibilityβ
Accessibility likewise plays a key role in determining real estate valuation. Properties that can be easily reached using various modes of transportation are likely to increase in value over time. The concept is that the lower the cost (in terms of time, comfort, and money) it takes to reach the property, the higher the propertyβs value is.
Various studies affirm this trend, noting that accessibility has a positive impact on a propertyβs value. Hence, properties developed with ease and convenience in mind are more likely to enjoy a higher market value and derive a bigger ROI for the investor.
4. Renovationβ
Most real estate investors and homebuyers consider the propertyβs renovation potential when deciding to purchase or invest in one. This includes the likelihood of increasing the floor space, laying a patio, installing a pool, or adding an extra story. If the property provides an allowance for the buyer to personalize or improve the structure, then its value will likely increase.
5. Property ageβ
Age is another factor used to determine a propertyβs value. Typically, newly constructed properties appraise at a higher value because the critical parts like plumbing, electrical elements, and roof are newer and, therefore, less likely to break down.
Aside from age, buyers also consider the condition of the structure when choosing a property to invest in. Ideally, you want a property that is structurally and aesthetically maintained to enjoy a higher market value.
6. Size and spaceβ
The value of a property in the Philippines is estimated per square meter. As of the second quarter of 2021, the average cost per square meter of residential-type construction is Php10,409. Generally, the closer the property to an urban area is, the higher its value is.
Apart from size, the usable space in the property is also factored in when determining real estate values. Bedrooms, bathrooms, and kitchens that can be extended are highly valued. Finished attics and well-developed basements also elevate the propertyβs value.
7. Building Regulationsβ
Building regulations often determine how the property may be used for residential or commercial purposes. For instance, if the policies allow restaurants, convenience stores, or boutiques to operate within the area, then the propertyβs value would increase due to its improved desirability and increased accessibility to shops.
