What causes two properties that are similar in terms of size and design to differ significantly in market value? The reason is the infrastructure and level of services in the area surrounding the property. The presence of paved roads, basic services and facilities, and good communication networks can make a difference between one property and another. In this article, we will learn about the infrastructure’s meaning and how it affects property valuation. 

What does infrastructure mean? 

Infrastructure meaning is a set of organisational, service and construction structures that form the basis on which communities rely to provide basic services to citizens and residents. It includes basic elements of life, such as water, energy, and communication, as well as public services like transport, healthcare, and education. 

Infrastructure is divided into two main types: hard infrastructure, which includes physical structures such as roads and bridges, and soft infrastructure, which includes services such as education and healthcare. The following is a definition of each type: 

First: Hard infrastructure:

These are the physical and structural facilities that enable individuals and communities to go about their daily lives smoothly. They include

• Road and transport networks:  such as motorways, bridges, tunnels, and public transport stations. The existence of all these contributes to facilitating mobility and access to real estate, which increases its attractiveness.

• Water and sewage networks: These are responsible for providing clean water and safely disposing of liquid waste. They include water distribution networks, water purification and treatment plants, and sewage systems.

• Electricity and energy networks: These provide reliable and stable energy, which is essential for residential or commercial real estate and reflects the efficiency of the infrastructure in the area.

• Communications and Internet systems: In the age of digital transformation, high-speed Internet and communications services have become essential to life. These systems include communications towers, Internet networks, submarine cables, and satellite systems, which contribute to fast communication and information exchange, thereby affecting property valuation. 

Second: Soft (social) infrastructure 

These are services and institutions that provide services to support the human and social aspects of society, including:

• Educational institutions: such as schools, universities, and educational institutes, are an important factor for families and investors alike.

• Health services: such as hospitals and medical centres, which influence purchasing or rental decisions, especially in residential areas.

• Security and administrative facilities: such as police stations, civil defence, and government departments, which increase the sense of security and civil discipline, and thus the value of the property.

• Recreational and social facilities: such as parks, cultural centres, and shopping malls, contribute to improving the quality of life within residential neighbourhoods.

How does infrastructure affect real estate value? 

Infrastructure is one of the most important factors affecting real estate valuation and one of the most important things a real estate appraiser looks at, as it provides for the basic needs of residents. Its importance lies in: 

• Improving the quality of daily life: The presence of basic facilities such as electricity, water, and means of communication contributes to a better life, as no matter how luxurious a property is, the absence of these basic facilities reduces its value. 

• Ease of transportation: One of the important factors that contribute to increasing the value of a property is the area surrounding it and the ease of access to paved roads and means of transportation. A property close to a metro or bus stop not only offers convenience in transportation, but also reduces daily transportation expenses and saves time, which makes it preferable to residents over others.

• Safe environment: When a property is located in an area surrounded by services and facilities such as police stations or hospitals, it contributes to residents’ sense of security and enhances the value of the property. 

• Increased demand for property: The more the area is supported by advanced infrastructure, the more popular it becomes for both residential and investment purposes. Proximity to schools and universities enhances its appeal to families, while the presence of hospitals and healthcare centres provides a sense of security and comfort. Recreational facilities such as public parks and shopping centres improve the quality of life and add a social and human dimension to the area. These factors combined make the location unique, leading to increased demand and property value. 

• Investment support: Areas with strong infrastructure encourage investors to open companies, offices, and business centres, creating jobs and stimulating economic activity in the area. Advanced infrastructure also facilitates the establishment of new residential and commercial projects that accommodate urban expansion, in addition to supporting road expansion plans and public transport networks.

In conclusion

Infrastructure affects real estate valuation not only in terms of the property’s facilities but also in terms of the surrounding area, providing a good quality of life and investment opportunities. A property is not just walls and a roof, but an integrated system where public facilities, transport networks, basic services, education, and healthcare are not luxuries, but key components that contribute to the true value of the property. 

Therefore, whether you are a buyer looking for a home or an investor seeking long-term returns, you must have a good understanding of the infrastructure in the area. At Aain, we help you accurately value your property. If you need an accredited property valuer, contact us now and we will guide you towards the best option.