The Impact of the Location on Real Estate
While buying a new real estate, the impact of the location on real estate must be considered the most fundamental and remarkable point in terms of all aspects, it comes on the first place of the good real estate the location that lead to the prosperity of the value of the real estate, thus attracts investors and buyers.
What is the impact of the location on real estate? What are the factors affecting the real estate? What increases the real estate value? How does the location affect the price of the real estate? This article will discuss the impact of the location on real estate.
As introduction there are two types that can be the impact of the location on real estate; the location from outside and inside. The location of the real estate from outside, such as its view of the sea or its proximity to the city center, then the location of the real estate in a crowded or quiet area.
Nevertheless, the choice of the location of the real estate is different from one person to another and it depends on the intention of the buyers weather is buying the real estate for investment purposes, or intends to convert it into a future home? However, in both cases the location of the real estate is no less important than any other point.
Furthermore, the impact of the location on the real estate from inside it depends on the services which are available in that real estate, whether that property is commercial real estate such as shopping centers, restaurants, commercial offices, hotels, and many others.
Residential real estate, as residential real estate differs depending on the number of rooms, area, number of floors, one-room or two-room apartments, completion, villas, townhouses, or real estate Industrial, which includes factories and distribution centers.
As mentioned above, it becomes clear to us that the impact of the location on the real estate during the purchase of a new real estate, depends on the type of real estate that the buyer wants to own or the investor to invest.
Factors That Impact the Location on Real Estate:
Due to the fact that the location of the real estate has a hug impact on the value of the real estate. therefore, there are a lot of factors that affect the location such as; The country’s demographics, bank interest rates on loans and assets, the country’s economic situation, government policy, unemployment rate in the country, safety in the market or low crime rate in the country in general, foreign capital in the country, state budget for the development sector, climate and weather of the country, the history of the city and the value of the currency in the country.
1- The demographics of the country: Some demographic data, such as: the age of the citizens, the social status of public and the economic status of the population, affect the real estate market. As the middle and upper classes enjoy high purchasing power, which means that the increase in income for most citizens has a significant positive impact on the real estate market.
2-Bank interest rates on loans: Interest has a pivotal role in the growth and development of the real estate market, as in the event that exorbitant taxes are imposed on property by the government, the public will hesitate to own housing units, which may become an additional bank for tax spending, and they may resort to investing in the real estate market in illegal ways.
If the government provides tax credits to owners, to avoid paying more taxes then real estate sales will rise, on other hand if banks facilitate the terms and conditions of loans many will tend to withdraw loans for real estate investment.
3-The economic condition of the country: the real estate market thrives and achieves more profits if the economy is stable, as the stability of the economic situation is one of the factors that attract investors, therefore, the sane investor will not want to waste his money in an existing investment in a country whose economy is collapsing. Owners will not be able to invest in the real estate market unless the local output of the state is good, there is job security, financial stability, and high purchasing power.
4-Government policy: with the increase of successful local investments, it will be attracted foreign investors to invest inside the country or for housing, however, in strict regulations that impose more taxes, the investor will flee abroad for a better opportunity.
The way in which the government governs the country has a huge important role because of its great impact on investment in the real estate sector, as the government helps the investor through tax exemptions and deductions, and encouraging investors contributes to the development of the country’s infrastructure.
5-The unemployment rate in the country: If the employment rate rises and the unemployment rate decreases in a country, thus the purchasing power will come, as it means independent income for most people and their ability to afford housing costs. As a result, the demand for buildings will gradually increase based on the purchasing power of the population.
6-Foreign capital: When an investor enters the local market, he brings with him resources, funds, trained manpower, machinery, and other things that are needed, which enriches the local real estate market. Therefore, the greater the proportion of foreign investors inside the country, the more real estate trade will flourish.
7-The state budget for the development sector: If the government allocates a larger budget for the development sector, the cost of buildings will decrease directly due to the decrease in raw materials for construction.
If the cost of buildings decreases, this will attract foreign investors because based on the decrease in the cost of buildings, the cost of doing business will decrease, and the public will enjoy People will have a better life and more job opportunities. On the other hand, real estate costs will rise if the government raises the prices of bricks, cement and other building materials.
to sum up, the impact of location on real estate can be concluded as the proximity of schools and colleges, surrounded by companies and factories that guarantee jobs for residents, and is close to shopping and entertainment centers.
Location of the real estate affects the quality of schools, especially for families, as the location of the property determines the class to which the students belong and thus the quality of the educational service provided.
Location of the real estate affects the job opportunities available in the region, and this factor may be of utmost importance for those seeking to own a real estate in a particular area, as the proximity of the house to the place of work saves a lot of effort, money, and time.
location of the real estate affects the number and quality of shopping and entertainment centers, These are things of great importance for young people who are about to buy a residential or investment unit, as the presence of the property in a place close to shopping and entertainment centers makes it a more sought-after property.
High-Value Locations:
Most urban areas with a strong job market, desirable suburbs, and coastal communities have a high value location. For instance, Maslak Aura Residences in Istanbul turkey the project is built using high construction technology, which makes it the first composite building in Turkey.
While the core of the building is made of reinforced concrete, the rest of the building is surrounded by steel. The building’s unique structure consists of three independent wings connected to the same core, providing residents with the ultimate sense of privacy and comfort.
Maslak Aura Residences project is a modern business and residential district located on the European side of Istanbul, Turkey. It is situated in the Sarıyer district and is one of the most important financial centers of Istanbul, where numerous multinational companies, financial institutions, and large businesses have their offices.
From Turkey Property Club’s perspective, Maslak is a high-end area that offers a mix of commercial and residential properties, making it an attractive destination for investors and business owners alike.
The area is known for its luxury high-rise apartment buildings, modern office towers, and world-class shopping centers, which provide a contemporary and upscale living environment.
The properties in Maslak generally have high-quality finishes and amenities. The area is also well-connected to the rest of the city, with easy access to major transportation links, including the TEM highway, the E5 motorway, and the Istanbul Metro.
As a result of its high-end features and amenities, properties in Maslak are generally priced higher than in other areas of Istanbul, making it a popular destination for high net worth individuals and businesses looking for premium properties.
Maslak is also an area with significant potential for future growth and investment, making it an attractive prospect for real estate investors looking to capitalize on Istanbul’s dynamic and expanding property market.
Click on the link here to see the details of the Maslak Aura Residences
Presentations_Maslak_Aura_Residences (1).pdf
Location and Future Value of real estate:
Real estate’s value may change according to the expected evolution and changes that might happened in the surrounding area
The key to understanding future value is learning how interest works. Basically, it’s the money you earn from money you keep in an account like a savings account or certificate of deposit (CD), or an interest-bearing investment, like a bond account or a bond fund.
How Do Values of real estate Change Based on Location?
Due to its influence on a property’s appeal, the location has the greatest impact on home prices. A house’s location makes it convenient to access places like the airport, shops, and more! The better your location and the more likely it is that your property will increase in value are the closer you are to the convenient hot areas.
One reason why the location has such a significant impact on property values is that they aren’t producing as much land as they once did. Location is always going to be your top consideration when seeking to purchase real estate as an investment because you’re searching for growth and leasing.
Balancing Location and Price for real estate:
The actual value of the real estate can be determined through comparing the purchase price with its value according to the real estate location. There are many aspects to consider, including yield and scalability.
The purchase price is the amount you pay for the property when it is sold. This price can be affected by a variety of factors, from the buyer’s real estate agent’s skill level to the seller’s underlying motives. This is the general rule in most cases, in order to get a good deal on a real estate, the purchase price must be less than its actual value. The only way to discover the true value of real estate is through whole assessment of real estate.
If you want to get help about how can you balance between location and price try to connect with our team:
Phone: +90 554 687 05 30 Mail: [email protected]
Real estate Assessment methods:
1-Location of the real estate:
Proximity, easy access to public transport, schools and other amenities that are part of most people’s lifestyles, such as shops and restaurants, will make the property more attractive to a tenant. In general, the flexibility and vitality of a neighbourhood’s atmosphere are two important factors when discovering its growth potential.
For example, if the area is likely to undergo development that will bring in more shops and cafes, or there are large infrastructure projects that could mean more local jobs, these things could increase the attractiveness of the property location as well as its value.
2-The age of the real estate:
This is an important factor, which can have an impact on the cost equation. Investment properties usually involve ongoing expenses, so you want to make sure you don’t buy a real estate that drains your money through maintenance costs.
Older properties may need more maintenance, but it all depends on the condition they are in – make sure you check everything, from the structure to all the fixtures.
Be sure to carry out professional building and pest inspections before committing to a sales contract.
3- Calculating the construction cost (replacement value):
it is a statement of the value of building a similar property according to the current market prices, then subtracting from it the decrease in value as a result of depreciation, in addition to the value of the site as if it were vacant.
4-Previous sales:
This method is based on the current market prices for selling other real estate, within a similar comparison to the real estate under evaluation, with appropriate adjustments made by deducting the value of the items that represent an advantage in the compared real estate, and adding the value of the items that represent an advantage of the real estate to be evaluated until the value of the real estate is determined.
5-Income capital: It is the process of converting the expected future income from the property into the value of converting the income into capital while relying on the principle of expectation of the future benefit of the property, as the value is equal to the amount that the buyer accepts to pay for the value of the property, which is the current value of all future cash flows, then The future cash flows are discounted to their present value.
Real estate investment in Turkey has its pros and cons:
Real estate investment in Turkey is the best type of investment in this period because of its advantages that are in the interest of the investor and return to him with material profitability, but for this type of investment there are things that must be taken into account in order for the investment to be successful, and investment in the real estate sector is a diversified investment of risk so that returns increase The greater the risk in it.
Therefore, it must be pointed out to an important point, which is that the percentage of loss may be small compared to other investments, such as investing in financial markets or stocks, in which the investor may lose most of what he owns at one moment, in addition to the fact that real estate is a fixed, tangible asset that can be owned and not a hypothetical thing. This feature makes the risk ratio very small, no matter how low real estate prices in Turkey are at some stage they will rise again.
What are the advantages disadvantages of real estate investment in Turkey?
-Every investment has advantages that attract investors towards it and make capital flow into it, the most important of which are:
-Obtaining a fixed, continuous and guaranteed monthly financial return.
-Increasing the value of the capital or increasing the value of the real estate in the long term, meaning that the value of the property after several years will increase and thus your capital will increase.
-The increasing and continuous demand on the rental market, whether the real estate is new or old, which guarantees a constant additional income.
-Obtaining Turkish citizenship by owning a property worth $250,000, and perhaps this positivity is the best, especially after the Turkish government allowed every investor to buy a property of the mentioned value and the possibility of applying and obtaining Turkish citizenship with his family, by purchasing any kind of real estate. Whether it is an apartment, office, villa or shop.
The negatives of real estate investment in Turkey are:
-The tenant stops paying the monthly rent or procrastination in paying the monthly allowance for the property, as delay and non-payment of rent are among the main risks for the investor, and as dangerous as they are unpredictable, their causes are multiple, such as temporary disability, job loss, or excessive indebtedness of the tenant.
-A misunderstanding of market prices or buying a property at a price that contradicts the nature of real estate prices in the same area, and this is most often the result of not studying the market well and not seeking the help of experts in this field or falling victim to the greed of brokers.
Conclusion:
To summarize, the location of the real estate is the one thing cannot be altered among all factors that can affects the real estate value. Location of real estate makes a place more desirable especially if the location has a quite advantages in addition to that the more demand increases the more high prices of real estate.
Therefore it all relies on the factors that affected the location in term of the history and the weather of the location, as well as the economy of the country.
