Factors Leading to the Growth of Real Estate Property Investment
Owning a real estate property is like owning a treasure whose value grows over time. Every family or individual makes a real estate investment in their lifetime. Most families with moderate income invest their maximum savings in a real estate property to expect beneficial returns in the future. Be it residential homes or commercial spaces, paying for real estate is an option for many people across the globe.
The exponential rise in land values has reinforced this belief throughout much of the world. The rate of return is not exceptional, but it is not a low rate. The annual growth rate of an investment property is less than 10%, even if it has grown 100 times in 50 years! Due to insufficient knowledge of compounding, people chase real estate blindly. The essential point is that people rely on historical data about real estate and expect the trend to continue. In other words, they anticipate that over the next 50 years, Real Estate prices will increase by a multiple of 100. However, there is no guarantee that this will happen depending on the specific location.
Utilization of Real Estate Property in Different Zones
The zoning law of properties is one of the main factors of growth in Real Estate value. Since lands were used for agricultural purposes and were not as populous as today, there was no proper segregation. As time passed and the commercialization of lands happened, the laws differentiated the land for residential and commercial purposes. Many of the improvements in the past 50 years have been a result of zoning law changes. Cities tend to grow in size over time, making the agricultural land adjacent more valuable.
Settlement and Infrastructure
Residential and commercial construction allotment opens an option to increase the infrastructure around. As roads, public parks, and markets are constructed simultaneously, the settling opportunities improve, causing a rise in the value of a property. Although this stage may take a decade or more to finally complete, the process is worth it. The price of real estate property increases as the development expands.
Commute to Work
Many companies do not pay transportation expenses to their employees. Hence, as a result of long commuting hours and tiredness, many people tend to settle and live in places that are close to their workplaces. As a result, properties near the workplaces demand higher rents/prices. A chain of such activities and connections makes the Real Estate properties more valuable and benefits investors, tenants, and other stakeholders.
A popular location becomes a hub for many social activities after it becomes popular with residents. You will find restaurants, shopping malls, multiplexes, and many more amenities in that area. People prefer this lifestyle, and thus properties in this residential market start valuing more. As a location becomes more developed, more people want to live there, and the price of housing and plots increases.
These are some of the many reasons why real estate investment will help you in the long run. Other factors include general inflation, government schemes, etc. As Real Estate advisors, we help you better understand the market price and the complexities of the market. Our ventures and partners are capable of providing the best Real Estate solutions to you. Make sure to get in touch with Flivv Realty for more in-depth insight on necessary topics discussing Real Estate investment opportunities.