Is it possible for your property to lose value even though it is in a good location and excellent condition? In the real estate market, market value plays an important role in helping owners and investors make financial decisions. However, the market value of a property may decline, leaving the owner wondering whether to keep the property, sell it, or even reinvest it.

In this article, we will discuss the key reasons that may lead to a decline in market value and the primary factors that influence it. We will also discuss how to deal with this situation consciously and professionally. 

What is market value?

 Market value is the most important valuation tool used to determine the true value of assets. It determines the amount of cash that must be paid and differs from the price, as the amount of cash paid for the property may be lower or higher than the true market value based on many factors. Market value is calculated by considering several factors, the most important of which are: 

• Location: It is one of the most important factors that determine the market value of a property. Properties located near vital facilities such as public transportation stations, schools, hospitals, and restaurants are more attractive to buyers and investors.

•  Supply and demand: Supply and demand play a big role in setting real estate prices. When there are fewer properties on the market than there is demand, especially in growing residential areas or densely populated cities, prices go up, and market value increases. But when supply goes up and demand goes down, value can drop even if other factors are positive.

• Property characteristics: The characteristics of the property, including area, specifications, regular maintenance, and condition (whether new or dilapidated), as well as whether regular maintenance is carried out, significantly contribute to its market value, especially in residential and commercial units within cities.    

•  Comparison with similar properties: The prices of similar properties sold in the same area are used as the main reference in determining market value. The real estate valuer  relies on the comparison method, comparing the characteristics of the property being valued with similar properties, making adjustments according to the differences between them. These comparisons reflect market reality and enhance the accuracy of the valuation.

• Economic factors: Although real estate is one of the safest types of investments, it is affected by the state of the economy. When the economy experiences stable growth, investor and consumer confidence rise, prompting them to invest in real estate as an investment or source of income. This confidence leads to increased demand and higher market values, while economic crises often lead to a decline in prices.

These are the most important factors that affect the real estate market and are considered by real estate valuers, who identify these factors to make decisions using one of the real estate valuation methods: comparison, income, or cost. 

How to add value to your property?

A drop in the value of your property can be detrimental, whether you are an investor or a seller. Here are some basic steps you can take to improve the value of your property: 

• Regular maintenance: Regular property maintenance is one of the most important factors that affect the value of a property and help increase its appeal and lifespan. This raises its market value and increases demand for it. Neglecting maintenance harms the property. 

• Improving the facade and outdoor spaces: First impressions are important, so beautifying the facade of the property, cleaning the entrance, and improving outdoor spaces such as the garden or balcony contribute to increasing its value, especially in residential units.

• Kitchen and bathroom renovation: The kitchen and bathroom are among the elements that buyers focus on the most, and any renovation or improvement in them adds tangible value to the property.

• Improving energy efficiency: Installing heat-insulated windows, energy-efficient lighting systems, or solar heaters makes the property more sustainable and saves on operating costs, making it more attractive, especially to investors and those interested in environmental efficiency.

• Utilizing unused spaces: Redesigning spaces such as the roof or basement to convert them into usable areas (home office, guest room, storage space) can add functional and material value to the property.

• Improving security and safety: Adding surveillance systems, intercoms, or improving outdoor lighting increases security and makes the property more reassuring to potential buyers, thereby increasing its market appeal.

• Improving security and safety: Adding surveillance systems, intercoms, or improving outdoor lighting increases security and makes the property more reassuring to potential buyers, thereby increasing its market appeal.

• Documentation: Preparing all ownership documents, licenses, and maintenance or improvement invoices reflects seriousness and credibility and facilitates the sale or appraisal process, which adds moral value to the property in the eyes of buyers and real estate valuers.

In conclusion

Understanding the factors involved in real estate valuation can greatly help you improve the market value of your property. Even properties in good locations, close to amenities, and in excellent condition can be affected by external economic or market factors that lead to a decline in value. Hence, the importance of conducting periodic real estate valuations to help owners or investors keep up with market movements and make informed decisions about retaining, developing, or even redirecting their investment.

Regular professional valuation not only gives you a figure that reflects the value of your property but also provides you with a clear view of market trends, the strengths and weaknesses of the property, and potential opportunities to increase its value. If you need a certified real estate valuer, contact us and make sure to continuously monitor the value of your property through a reliable real estate valuation, so that you are always in a position to make the best decision at the right time.