28 Aug 2019

5 factors that influence property value

Investing in empty land plots is another interesting type of real-estate investment because there is no depreciation or maintenance which are fixed expenses. Appraisal is much simpler when trading such properties as well.

Most investments in empty land plots are for ‘capital gain’ because renting out empty land plots is quite challenging and is difficult to establish any significant return. So let’s take a look at the 5 factors that can influence the value of empty land plots.  


1. Shape and size of the land plot
The reason the shape and size of the empty land plot is the first influential factor is because both characteristics will influence future property developers. Let’s say there are 2 land plots with the same area of 5 rai. However, Plot A has one side that is adjacent to a main road spanning 250 meters wide. Plot B has one side that is adjacent to the main road spanning only 100 meters wide, and is shaped like a rectangle deep into the depth of the plot. Of course, Plot A would be the more desirable of the two with a larger side adjacent to the main road. This is the side that allows for more retail space which is revenue for potential buyers who are business owners.


2. Infrastructure development
Real-estate that has the infrastructure to facilitate convenience will surely increase the value of the property, especially for future development. This includes electricity, water, roads, and public transportation. Most investments in empty land plots will start when infrastructure projects are getting started so that investors can sell when the infrastructure projects are completed and property value has increased.  


3. Changing the usage of the land
Another factor that can help the value of an empty land plot to leap is to change the usage of the land. For instance, many empty land plots were once unattractive investments before residential areas started mushrooming, creating communities and markets. With more foot traffic, other property development projects are born such as parking lots or even retail stores to serve the community.

Another popular trend in real-estate is to invest in ‘blind spots’, which are plots with no entrance or exit, or no areas adjacent to a road. Many investors purchase multiple plots to create a large plot of land that has a side adjacent to a road.


4. Plots near communities
Naturally, communities tend to expand. People are moving into communities more and more to enhance their quality of life. Investing in properties in communities that has potential for urbanization is one popular strategy that investors in empty land plots are considering because urbanization usually brings with it convenience.


5. Vulnerability to flooding
Most of us know the massive floods in 2011 has affected many property owners. Sea level has never been more influential on the value of land. Land situated at higher sea levels are at less risk of flooding, and so property prices there are naturally more attractive. Apart from our own land, the sea level of routes to the property must also be considered. The lower the risk of flooding of the routes, the better your chances of higher property value.


Lastly, investing in empty land plots requires consideration of ‘land tax’ which will be implemented from 2020 onwards. Empty land plot owners who do not develop their property will face higher land tax.