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What is land valuation?

What is land valuation?

While you may have heard experts mention that land is a secure investment, you should be aware of certain critical points before proceeding with the investment. Since it is a big financial decision, you have to know the details about land valuation and its ways. This guide will assist with the key factors that impact land value and how it is calculated.

 

Land valuation

Land value refers to the total value of a property – land plus any alterations or enhancements made to the project. Land valuation surges if:

 

What is site value?

Site value is the land’s fair value in the absence of rentals, mortgages or anything that will impact the property value.

 

Factors that impact land valuation

See also: Why are plotted developments considered safe investments in India?

 

What are the methods used for land valuation?

Circle rate or guidance value

The minimum value is commanded by the land as per government directives. This is the benchmark based on which the property’s stamp duty and registration charges are paid.

Developmental method

The land valuation is done based on infrastructural development.

Land valuation = Gross development value (GDV) – (cost of construction + profit + other fees, such as marketing, transaction, convenience fee etc.)

This is also known as the residual land value method.

Comparative method

As the name suggests, two pieces of land are compared based on age, land condition and presence of physical/social infrastructure.

 

FAQs

How can you calculate land value?

Circle rate, development method and comparative method are how you calculate land value.

When does a land see a value surge?

When the demand is more than available, the land value sees a surge.

What is a comparative method of land valuation?

A comparative method of land valuation is when you compare two pieces of land based on certain factors and decide the price.

What is the circle rate?

Circle rate is the minimum value that a land commands, as fixed by the state government.

What is market value?

Market value is the value at which a property is sold to the buyers. A circle rate can be less than the market value.

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com

 

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