Property valuation is a major element of a property transaction in India. This specific component evaluates the market value of the Real estate property. In urban regions, the value of a land or a property has been growing exponentially over the past 2 decades. Despite the slowdown of the past couple of years due to the COVID-19 pandemic, the value appreciation of new land or property has been pretty negligible in India as per the 2021 studies.
According to AddressofChoice Realty Pvt Ltd, a Real Estate Consultant Firm in India, the key behind developing a precise land-value assessment is the process of land-value mapping. Keeping that in mind, numerous land valuation systems have been developed in the past to calculate the true value of land across the globe. There are only a few that have been truly efficient on this front. Those methods are also accepted very commonly in India.
Different types of methods for property valuation may vary depending on Building, buying, or selling a property. The value of the property may vary depending on the valuation method used.
Few commonly used properties valuation methods for Property in India are shared below.
The comparative method is also widely known as Sales Comparison Approach. This approach helps to arrive at the price of the property effectively. The comparative method includes comparing property values of multiple similar properties from their latest sales figures in the current market to achieve a capital value for properties and rental yield.
Also known as Residual Land Value Method, this is a process of valuing land which has good development potential. This approach is popularly used where the best real estate developers sell a plot for a development purpose. The development method is utilized for calculating whether a profit can be obtained on development or not.
Guidance Value Method:
This process is also known as Ready Reckoner Rate or Circle Rate. This process is taken care of by states to levy registration charges and stamp duty on the transfer of properties.
Land & Building Method:
Under this particular method of land valuation, the value of land is assessed separately. Once it is done, the value of the building is added to the number, and then calculated for the final value. Using the Land & Building method, one can determine the land valuation and the property valuation distinctly.
The Belting Method:
This method is most efficient to assess the value of large land. In this process, the entire land is divided into three belts at first. Most weightage is given to the land closest to the front roads. 75% of the value of the first belt can be assigned to the second belt and 50% of it can be assigned to the third.
Many other factors can affect the property value in India:
- Location: Location always plays a major role in property valuation. Like properties with a view, properties that are centrally located in a city come in a higher price range. Convenience is a great factor like good connectivity to railways, airports, and bus depots can determine the value.
- Shape: Nobody prefers odd-shaped properties. Vastu plays a major role in Indian properties and therefore the shape and room facing matters a big deal.
- Size: The square footage is also a huge factor determining a property value. Your property might be a bit smaller than the other one, while the price might seem to be a lot lesser.
- Level: Upper story flats, the penthouse come in much higher prices than the rest. In many areas, the ground and the highest floor of a flat come at a cheaper price than the rest.
- Infrastructure: The infrastructure and credibility of the builder also determine the property value.
- Safety: Safety is a very prominent determinant of property value in India. For Indian property complexes, one can offer much higher value than a stand-alone building.
- Frontage: Easier entry to a property or a corner plot might seem like a premium one in the city.
- Legal Issue: A property value drops significantly if the papers have some disputes or there is any type of legal issue going on.
Besides, in India, amenities also play a significant role at the time of property valuation nowadays. That is why building complexes can ask for premium prices while standalone buildings cannot. A swimming pool, gym, community hall, parks are a few of the amenities which are highly common amongst all the residential complexes of India.