What are The Top 6 Factors That Affect The Cost Of Land?

Why investment in land is considered to be a good one? Though there are many reasons to buy land to earn rich returns but a smart buyer should look for other factors as well. Investing in real estate was never easy and would never be as it needs a lot of research and a huge amount of money.

An important physical asset is land that seems to be a lucrative option ensuring good returns and better appreciation in the short run. Even, in the long run, they offer rich benefits as compared to residential properties.      

But, if your thing buying a plot is easier, then you are totally wrong and it is crucial to understand the factors that impact land pricing.

There are various things that need to be taken care of while calculating the value of land. It can be estimated as monetary cost of land, whether developed or undeveloped.

Mainly, it is based on several parameters, including accessibility and land use, physical attributes, location of the land parcel, prevalent price in neighbouring areas, and the demand and supply of the plot for sale.

This article will definitely help a buyer in understanding all the factors in detail one by one. So, let’s have a look:

Location Of The Land Parcel

Very Important point is to have a clear and sharp look at the location which is helpful in determining the price of land. The pace of development in the neighbourhood and the kind of constructions taking place majorly affects the price of the land parcel significantly. So, it is preferred to choose to buy a property that are situated in developed areas with proximity to major arterial roads, transport linkages, upcoming highways, or popular landmarks tend to be priced higher as compared to plots that are in developing localities.

Not only this, another influential factor is the availability of green spaces/belts nearby. Supposedly, a land parcel that is surrounded by ample of greenery will be seen priced higher in comparison to the land that is surrounded by industrial developments.

Along with that, the quality of soil, climatic conditions, and availability of basic infrastructure, such as water supply, also impact the land pricing. Thus, whenever you choose homes for sale, foremost have the look at the location.

Present And Future Land Use

Every given piece of land is allotted for a specific usage and holds restrictions, in such cases land that has the potential to offer an increased rate of return over a given period of time will be valued more. It can be meant for residential property, commercial property or mixed use development.    

However, sometimes industrial or institutional land might have high prices and in comparison to that agricultural land has the lowest price owing to the number of restrictions on the permitted activities.

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Demand And Supply Of Land

It is the simple economic study that when the demand rises, prices also increase and if supply is increased the prices gets decreased. So, as the population is increasing and so as the economic activities in the past few years the demand for land has also surged.

Along with this, it is quite evident that at prime locations of the city the prices of land are higher when compared to outskirts. And why it is so? It is because good areas have all the facilities and are equipped with all necessary amenities. Therefore, it tends to attract buyers and investors both.

Moreover, over some years as there is scarcity of land within the city limits, it has eventually led to an exponential increase in the prices of the properties as compared to the peripheries.

Floor Space Index (FSI)

FAR i.e. an abbreviation for Floor Area Ratio that is also known as Floor Space Index (FSI) is yet another significant factor that put influence on plot prices.

To better understand, FAR is FSI is determined by several parameters, including the size of the plot and the width of the road. In simple words, it refers to the space that can be utilised for construction activities. Any increase in the FAR automatically increases the market value of the plot.

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Condition Of The Land

Another factor that comes is the condition of the land area. As per the trend, the fertile land generally carries more worth than the land which is worn out. For example, forest land is priced higher than a clear cut forest. Appraising land that has a superior appeal is high in price when compared to selling properties with no particular features.

Assumptions/ Expectations About The Land

The last factor that is left uncounted is the assumptions or the expectation for the project for sale as it highly affects the prices.

Higher demand than supply will create speculation that the place will be growing shortly. Thus, it will ultimately create the demand for land.

Conclusion

Therefore, to summon it up in short:

• Location of the property.
• Plots in the centre of the city are the costliest of all locations.
• Plots located towards the South are also highly-priced. (Observed and not factual)
• Costlier plots inside a gated community, especially in cities such as Bangalore, Noida, and Mumbai.
• The width of a road plot that is located on an 80-100 ft road is priced higher than a plot that is situated on a 30-40 ft road.

Believers of Vastu will prefer plots and even flats for sale facing the East are costlier than the ones facing the West or the South.

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