What are the major factors that cause an appreciation of property?
June 16th, 2021
Real estate has always been considered as the most fruitful asset when it comes to an individual’s investment portfolio, no matter whether it is for a short term or a long term. Property is undeniably one of those assets that can bring you huge returns ahead of the inflation rate. Despite the high potential of returns in real estate investing, only a small part of the entire population goes ahead in investing in real estate. As the majority of the population is unaware of how the entire property market operates, we would discuss today the major factors that can cause an appreciation of a property. This would enlighten several people and help them in making right and strategic decisions.
Major factors that cause an appreciation of property
- Infrastructural development of a particular area – Infrastructure development usually plays a pivotal role in the price appreciation of a property. Any better connectivity, road, transport or establishing a transit hub would act as a prime growth driver as these facilities would drive more population and increase the demand for properties in that particular space. The investors who invest at the right time get the best returns out of their investment in real estates. For example, in the present times, the property market is presently witnessing a steep demand from the end-users as well as investors. The new projects that are being launched in a strategic location are getting good footfalls from a large group of serious buyers. The reason for the same can be a proposed metro railway line/station that is a very crucial infrastructure. The construction of the proposed metro infrastructure may have commenced and would optimally boost the connectivity between the property site and the rest of the city once launched in the near future.
- Amenities in the project – The number of amenities that the property offer like a swimming pool, gym, badminton court, kid’s pool, table tennis, aerobics/yoga hall, spa, health club, indoor games facility, multipurpose hall, outdoor multi-play area, outdoor kid’s play area, convenience store, pharmacy etc. Increase demand and appreciation of the property.
- Planning and future development – The appreciation of the property depends largely on how the property is planned and the social infrastructure within the project premises and the surrounding environment. If a property is built with a futuristic point of view with several developments in the present time and also probable developments in the future, then the price of that property is most likely to rise in the future and lead to a fair appreciation of a property.
- Age & condition of the property – When it comes to the premium properties located in strategic locations and are maintained in great condition, the age of the properties does not really create a serious difference to the overall value of the property. Even if the property is old but still in excellent condition, you can still receive a great valuation on par with a property that is newly built and has equivalent specifications.
- The economic situation of the country – The economic situation of the country plays a pivotal role in the appreciation of the property. In case the inflation rate is very high, the value of the money will also considerably reduce. This usually means that a particular builder would require to spend more for the purpose of input items like the materials for construction, interior furnishings, labour charges, permits and several other aspects for constructing the property. So, if there is increasing inflation, property prices would rise. However, this is not the sole factor for the rise in the price. The combination of other factors like an infrastructural requirement, accessibility etc. of a particular area contributes to the price rise of the property. Also, overall country’s economic indicators like GDP, unemployment rate, parity of purchasing power etc. contribute largely to the appreciation of a specific property.
The above factors majorly cause an appreciation of property. Apart from that, there are several other factors like the size, age, location, condition, demand & supply scenario that determines the value of a particular property.