UP475: Maintaining Value

UP 475 : Real Estate Dev. Fundamentals

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Maintaining Value

Kunlin Lee

Hristiyana Palapusheva

Shravan Pingale

​Discussion leaders:

Multiple Select

Which do you think are

the factors that cause property price appreciation?

• Infrastructure development

• Upcoming or available amenities

• Local development

• Policy changes

• Economic situation

The factors that cause property price appreciation

Infrastructure development

• a key role in price appreciation

• a growth driver - new connectivity, transport, road, or transit hub; expected to bring more population and more demand

Example:

Gurgaon’s property market is currently witnessing major demand from end-users and investors. New projects being launched in the region, are seeing major footfalls from serious buyers. This is because the upcoming Dwarka Expressway, a major infrastructure project, will boost connectivity between the national capital and Gurgaon. As a result, properties located along this stretch will become more attractive and fetch better returns for the investors.

The factors that cause property price appreciation

Upcoming or available amenities

Property owners, who continue to upgrade their property, can get a better rate than the prevailing market rates. This could be a basement garage or a mini terrace garden or a kitchen lawn. In addition to this, the architectural design, upkeep and interiors of the property, also play a pivotal role in price appreciation.

Poll

Would you like your property to offer parking space?

• Yes

• No

The factors that cause property price appreciation

Local development

For a property market to appreciate, it is very important that the local neighbourhood and the social infrastructure, support growth. A property in a gated residential colony with a functional residents' welfare association will be preferred to a stand-alone property located in a regular colony. Similarly, green cover, security surveillance, facilities in the immediate neighborhood and type of gentry residing in the area, can also result in property appreciation. In an area, where stand-alone properties give way to independent floor constructions, the properties may become more preferred but it may not appreciate in terms of value.

The factors that cause property price appreciation

Policy changes

One major policy that directly impacts real estate appreciation, is lending rates. Cheaper cost of borrowing brings more buyers to the market, creating more demand and appreciation. Similarly, reductions in stamp duty rates, circle rates, GST rates, income tax benefits, etc., directly impact demand.

The factors that cause property price appreciation

Economic situation

A country’s economic condition also plays a vital role in property appreciation. If the inflation rate is high, the value of money will reduce. This means that a builder would need to spend more on input items like construction materials, labour, permits, etc. However, this does not imply that the property prices will rise, irrespective of the growth drivers. For prices to grow, properties have to meet several requirements, including accessibility, infrastructural requirement and availability of residential properties. In addition to this, the overall economic indicators such as GDP, purchasing power parity and unemployment rate, also contribute to price growth in the long run.

Multiple Select

What are the factors that affect property value?

• Location of the property

• Its size, age and condition

• The supply and demand scenario in the micro-market

• Parking

Multiple Choice

What makes house prices fall?

• Еxcess supply and/or a decline in demand

• No parking spaces

Multiple Choice

What causes real estate prices to increase?

• An increase in demand for properties or if supply reduces

• Parking spaces

Maintaining the value of a real estate project

Regular maintenance

Keeping the property in good condition is essential for maintaining its value. Regular maintenance tasks such as cleaning, landscaping, and repairs can prevent minor issues from becoming major problems and help preserve the property's overall condition.

Maintaining the value of a real estate project

Upgrades and renovations

Investing in upgrades and renovations can increase the property's value and appeal. Examples might include upgrading the kitchen or bathrooms, replacing outdated appliances, or adding new features such as a deck or patio.

Maintaining the value of a real estate project

Strategic marketing

Effective marketing can help ensure that the property stays competitive and desirable. This might include using online listings, social media, and other platforms to reach potential buyers or tenants.

Maintaining the value of a real estate project

Strong tenant or buyer relationships

Building and maintaining positive relationships with tenants or buyers can help ensure that the property remains occupied and well-maintained. This might involve addressing concerns promptly, offering incentives, or providing excellent customer service.

Maintaining the value of a real estate project

Monitoring market trends

Staying aware of trends in the real estate market can help property owners make informed decisions about when to sell, lease, or invest in upgrades. This might involve monitoring local property values, rental rates, and vacancy rates, among other factors.

How can property owners balance the costs of maintenance and upgrades with the potential benefits to the property's value?

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What role do market trends and conditions play in determining the best approach to maintaining the value of a real estate project?

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Questions

Bibliography

Sources (Information) :

• https://corporatefinanceinstitute.com/resources/valuation/price-appreciation/

• https://www.homelight.com/blog/what-makes-property-value-increase/

• https://housing.com/news/top-5-factors-make-property-prices-appreciate/#What_are_the_factors_that_affect_property_value

• https://www.opendoor.com/articles/factors-that-influence-home-value

Sources (Videos) :

• https://www.youtube.com/watch?v=tyaLA1Nosq0