Conditions That Affect Land Values

by : Craig Berger

There are many conditions affecting land values. If you are interested in purchasing land as an investment opportunity, it's important that you know some of them. This will help give you an idea of how much and in which direction your land value is likely to fluctuate in the future.

Land Scarcity and Land Values

As with most tradable goods, the more land that is available, the less it is worth. The amount of available land in an area lends to its value. If there is a limited amount of land in an area that you can purchase for a reasonable price, you have a tremendous land buying opportunity.

Arability and Land Values

Cultivable land is extremely valuable all over the world. You may not be interested in growing anything on your property, but if you own land with fertile soil, you are likely to find someone who is, and you can sell your land at a considerable profit.

Zoning Issues and Land Values

Many areas have local governments that may place restrictions on land development. Depending on the restrictions, this may have a negative affect on your land's value. The more freedom one has to develop their land, the greater the potential value of that land.

In some cases, this may be counterbalanced by the perceived prestige of the area. For example, if your land development is heavily restricted because it is in a community with many wealthy landowners who do not wish their community disturbed, you may be sitting on a very valuable piece of property.

Development and Land Values

Naturally, the value of your land may be dependent on what you develop on it. If you create a thriving business on your land, you may include that in the total value of your property. In fact, you could even sell that business and retain the land, enjoying the hard profit from the sale of the business while continuing to generate income from the business' use of the land.

Taxes and Land Values

Different areas are taxed at different rates. This will not necessarily be a major factor in your land value, but high taxes may deter some potential buyers.

Security and Land Values

The relative safety of an area may also be a consideration. Land values in peaceful countries will probably be less variable than land values in war-torn areas of the world.