Valuing property investment requires proper knowledge of how different types of land affect it. The kind of land, its usage potential, and its actual usage directly influence the value of that property. Here, we identify different types of land and briefly explain how each impacts property valuation. Buyers, sellers, and investors need to know the value of land because it can be a game-changer when making profitable decisions.
Residential Land
Residential land is zoned specifically for housing. In most cases, such land is situated in a neighbourhood or suburbs and comes with all the essential infrastructure, including roads and utilities. The value of residential land is mainly influenced by its location, access, and proximity to neighbourhood facilities like schools, hospitals, and shopping centres. When the population is highly congested, the demand for residential homes increases; therefore, value appreciates. Residential land valuation of property also depends on regulations governing housing density, which determines the number of dwellings a plot can accommodate.
Commercial Land
Commercial land is generally used as a business area and it can be categorised as an urban or suburban area. Examples of commercial land include retail shops, office buildings, and warehouses which are developed on the land. An outright commercial use of land often brings high value to properties because of the property’s potential for revenue generation. Valuation of property in terms of value takes into account factors such as foot traffic, proximity, and infrastructure. Also, fluctuating economic conditions influence the value of property, since business growth translates to demand for commercial space in a geographic area.
Agricultural Land
Agricultural land is utilized mainly for farming, crop cultivation, and animal breeding. Such land has a different kind of valuation, which, at times, is done based on soil fertility, climatic conditions, and availability of water sources. Agricultural land has a unique property value, for instance, depending on the type of crops to be cultivated and the productive use of the land. Property valuation of property has little dependence on urban infrastructure but on its agricultural output and market trends of the farming sector.
Industrial Land
Industrial land is used for manufacturing, warehousing, and distribution. In general, industrial land generally requires access to primary routes of transportation highways, railroads, and ports; the value factor on which industrial land depends includes proximity to a distribution network, zoning regulations, and fulfilment of environmental requirements. The property value of property is high when located near the main routes of transport but strict environmental regulations may affect the value of this property by limiting the kinds of industries that are being performed over it.
Mixed-use land
It is a combination of residential, commercial, and sometimes industrial uses in one area. Mixed-use lands have become quite popular lately in urban planning to create a live-work-play environment to suit modern ways of life. Hence, the values of property on mixed-use land are generally higher since it caters to various investors, residents, and businesses. Effective land use in a mixed-use area increases the value of property as the space becomes increasingly sought after for residential as well as trading purposes.
Recreational Land
Recreational land is intended for recreational activities like parks, golf courses, or nature reserves. Although recreational land has no direct link with commercial property, it enhances the value and beauty of properties within the community. For instance, a residential property neighbouring a park typically yields a higher appraisal of the property due to a better quality of life. Recreational land utilisation is also required in a community as it will better the well-being and the allure of a property.
Conclusion
Knowledge of the types of land and their specific uses plays a pivotal role in establishing the value of property in property investment. The characteristics of each land type will determine its value, whether that is in commercial land in terms of income potential, agricultural lands in terms of productivity, or recreational spaces for communities. Knowing the factors of influence the value of property concerning land use benefits the investors to better understand their investment. Their investments become worthwhile, not only because they are by market trends, but they will also take into account aspects of regulation shortly. Long-term value is often determined by how versatile usage and potential can be, making it a critical determinant in real estate.
