Real estate is one of the most valuable and sought-after assets in India. Whether buying, selling, renting, or investing in a property, you need to know its market value. But how do you determine the real estate value in India? What are the factors that influence the property valuation? What methods and tools can help you accurately estimate the property value?
This article will address these queries and offer some tips and tricks to calculate the property value in India.
Factors that Affect the Property Valuation in India
The value of a property depends on various factors, such as:
1. Location
The most important factor determining a property’s value is its location. Properties in posh locations, such as city centers, commercial hubs, or near public amenities, tend to have higher values than those in remote or underdeveloped areas. The connectivity, accessibility, infrastructure, and security of the location also affect the property value. If you are financing the property, you can use home loan calculator to determine your monthly commitment.
2. Size
Another factor influencing a property’s value is its size, measured in square feet or square meters. Generally, larger properties have higher values than smaller ones, as they offer more space and utility. However, the value per square foot may vary depending on the property’s location, quality, and demand.
3. Type
The property type, such as an apartment, independent house, villa, plot, or commercial space, also affects its value. Different properties have different features, advantages, and disadvantages, which impact their value. For example, apartments may have lower values than independent houses, as they have less privacy and ownership rights. However, apartments may have higher values than plots, as they are ready to move in and have amenities and facilities. If you are buying the house under the perks offered by the government, it is recommended to use PMAY subsidy calculator.
4. Age
The property’s age, or the years since it was built or renovated, also influences its value. Older properties have lower values than newer ones, as they may have more wear and tear, depreciation, and maintenance issues. However, some older properties may have higher values than newer ones if they have historical, architectural, or cultural significance or if they are located in heritage zones.
5. Quality
The quality of the property, or the standard of construction, design, layout, materials, fittings, and finishes, also affects its value. Higher-quality properties have higher values than lower-quality ones, offering more comfort, durability, and aesthetics. The quality of the property also depends on the builder, developer, or contractor who constructed or developed it.
6. Demand and supply
The demand and supply of the property, or the number of buyers and sellers in the market, also impact its value. Higher demand and less supply guide to higher values as the property becomes more scarce and desirable. Lower demand and higher supply lead to lower values as the property becomes more abundant and less attractive.
Methods to Calculate the Property Value in India
There are various methods to calculate the property value in India, such as:
Sales Comparison Approach
This is one of India’s most commonly used methods to assess property value. This method assesses the value based on the price similar properties got when recently sold in the same sub-market. The similar properties are called comparables, and they should have similar location, size, type, age, and quality as the property being valued. The price of the comparables is adjusted for any differences or variations with the property being valued, and the average or median price is taken as the property’s value.
Cost Approach
This approach is used for properties that have been redeveloped or where a comparable property is unavailable. It assesses the value based on the cost of constructing or acquiring the property, plus the profit and other fees involved. The cost of construction or acquisition includes the cost of land, labor, materials, equipment, and overheads. Other expenses include the builder’s profit, developer’s fee, broker’s commission, taxes, and registration charges.
Component approach
This approach is used for properties with multiple components or units, such as apartments, villas, or commercial spaces. In this method, the value is assessed by adding the values of each component or unit of the property. The value of each component or unit is calculated using the sales comparison or cost approach, depending on the availability of data and the nature of the component or unit.
Conclusion
Determining the real estate value in India is not straightforward, as it involves various factors, methods, and tools. However, it is an essential task, as it helps you make informed and profitable decisions regarding your property. Therefore, you should use a combination of methods and tools and consult a professional, if needed, to estimate the property value accurately and realistically.
