VARIABLES INCREASE LAND PRICES
Location factor often account for 40% of the value of property but land prices are currently affected by more variables.
In order to verify the relative value of real estate, investors can base on the rate of:
- 40% based on location.
- 30% based on reputation of investor& developer.
- 30% based on remaining variables.
This test method is used to measure value of real estate is reasonable or not and it is from what cause.
Location is considered the core value of real estate. It means:
- Real estate is located on the front of a big avenue or a small road?
- How wide is the street?
- How far to major arteries?
- Near what utilities? For example: metro lines, shopping malls, parks, etc.
That is the reason why real estate in the urban center always has a high price and it keeps increasing.
Besides the location, brand and reputation of the investor is another variable appears most clearly in the last 5-10 years as more and more developers are rich and experiences, thanks to accumulating through many market fluctuations.
However, the remaining 30% is an extremely difficult to calculate and confound market. It depends on legal, infrastructure push, planning information, marketing effects and even sophisticated scams.
This is also the loophole that creates price bubbles. Authorities are gradually making the real estate market transparent but it takes a lot of time.