Have you ever thought that the value of a property differs after development than before? Actually, yes, as there are many factors that affect property valuation, the most important of which are the condition of the property, the level of finishes, the area, and the location, in addition to improvements and upgrades that may increase its market value and expected return. In this article, we will explain the most important of these factors and how real estate development helps to change the value of a property.
What does real estate development mean?
Real estate development is defined as the process of planning, designing, building, or improving real estate with the aim of increasing its value and using it more efficiently. This field includes different types of projects, such as residential, commercial, industrial, and tourism, and aims to meet the needs of the real estate market and achieve sustainable economic returns. The most important types of real estate development are:
Residential development:
This includes the construction and development of houses and residential complexes to provide safe and comfortable housing for individuals and families, including single-family homes that offer privacy and space, multi-family dwellings containing multiple residential units with shared amenities, as well as terraced houses that share walls with other units but have private entrances, and apartments that are individual units within a larger building with shared facilities such as swimming pools and gyms.
Commercial development:
This type focuses on the creation and management of real estate dedicated to businesses and companies, including office buildings that provide a suitable environment for administrative and professional work, retail centers that include shops and restaurants located in vibrant areas to attract customers, and industrial facilities such as warehouses, factories, and distribution centers designed to accommodate large industrial and logistical operations.
Mixed-use real estate development:
This refers to projects that combine residential, commercial, and entertainment uses in a single complex, with the aim of providing an integrated environment that meets the diverse needs of residents and visitors in one place, while creating communities that combine work, living, and leisure.
Specialized real estate development:
This includes real estate designated for specific uses, such as tourism development, which includes hotels and resorts; healthcare development, which includes hospitals, medical centers, and clinics; and educational development, which includes schools, universities, training centers, and research facilities. This type of development aims to meet unique needs that differ from residential or commercial development.
Therefore, real estate development is an important component of economic growth and job creation. It also contributes to improving the quality of life by creating integrated projects that provide modern facilities that meet the needs of residents and increase the attractiveness of communities for living and investment.
What factors affect property valuation before and after real estate development?
The importance of real estate valuation lies in determining the true market value of the property based on several factors that a real estate valuer studies. The property is valued before real estate development according to its location, area, and structural condition. After development, the real estate valuer takes into account all the improvements that have been made and their compatibility with market needs. Therefore, real estate development is very important in raising market value. The most important of these factors are:
The quality of finishes and materials:
Old or worn finishes negatively affect the value before development, while the use of modern materials, neutral colors, adequate lighting, and good ventilation systems make the property more attractive after development, which increases the sale or rental value and shortens the marketing period.
Space and internal distribution:
In many cases, the property may have good space but it is not used efficiently. Development allows spaces to be redivided, expanded, or combined to meet the needs of users, such as adding a larger living room, storage space, or balconies. This better use of space increases the value of the property after development compared to its previous state.
Location and surrounding environment:
Location remains one of the most important elements of valuation, both before and after development, but development can increase the value of a property when it keeps pace with changes in the surrounding area, such as infrastructure improvements, the addition of nearby services, or the transformation of the area into a residential or commercial attraction.
Provision of facilities and services:
Adding or improving basic facilities such as parking lots, security systems, elevators, green spaces, or play areas are elements that increase user comfort, thereby raising the property’s value after development compared to what it was before.
Operational efficiency of the building:
Older properties often suffer from high energy consumption or poor ventilation systems. After development and the introduction of modern insulation systems, smart controls, energy-efficient lighting, or solar energy, the property becomes more economical to operate, resulting in a higher valuation due to reduced future operating costs.
Commitment to sustainability:
The global trend toward sustainability has made properties that incorporate green spaces, environmentally friendly materials, and renewable energy more attractive. These elements not only affect current value, but also give the property a better investment future, raising its valuation after development.
Market demand and expected return:
A property may have limited value before development if it does not meet the needs of the market at that time. However, smart development that adds desirable features such as additional rooms, modern amenities, or commercial spaces increases demand and the expected return on resale or rental, which is clearly reflected in its valuation after development.
In conclusion, it is clear that real estate development plays an important role in increasing property value by improving finishes, utilizing space, and providing modern and sustainable facilities that meet market needs.
For this reason, Saudi Arabia asset valuation before and after development has become a necessary step for all investors and owners to ensure the true value of real estate assets is appreciated. If you need a certified real estate valuer or real estate valuation company, contact us now.
Frequently asked questions:
How do you know the real price of a property?
To determine the true market value of a property, the real estate valuer relies on a comprehensive study of the fundamental factors that affect market value, such as location, size, condition of the property, finishes, amenities, and market demand. After gathering this information, the valuer analyzes current market data, compares the property to similar properties, estimates the value based on potential returns from sale or rent, and prepares a certified real estate valuation report that helps the buyer or investor make sound investment decisions.
Who determines the value of property?
The property is valued by a certified real estate valuer or real estate valuation company from the Saudi Authority for Certified valuers to obtain a certified real estate Saudi Arabia asset valuation valuation report that includes the true value of the property, helping the investor or buyer make successful investment decisions.
What are the top 3 valuation methods?
Real estate is valued using several main methods, including the comparison method, which compares the property to similar properties that have been sold recently; the cost method, which calculates the cost of constructing the property, taking into account depreciation; and the income method, which is based on the expected returns from the property, such as rent. Each method is used according to the type of property and the purpose of the valuation.