5 Factors that Determine the Price of Plots

Today we are going to talk about the factors that determine the price or rate of a plot or property. Land is an important asset and the investment in land is known to be beneficial as it guarantees better appreciation and features higher long-term returns for investors.

The value of any property, besides factors like its structural features and location, is significantly influenced by its land rates. And the value of land has increased manifold in the last 5 years in Pakistan. So, if you are considering investment in land, plots or property it is necessary to understand the major factors that impact land pricing. Here are the major factors which determine prices of plots.

Location

A very crucial factor which determines the price of land is Location. Close proximity to Main Boulevard, transport linkages, upcoming highways or an important landmark, leads to a higher rates of the plot or the land. Moreover, land which is surrounded by greenery is priced higher than plots surrounded by industries or factories.   

Topography

The landscape, soil quality, climate, presence of ground water, etc., have a strong impact on the land price. The land with weak soil or rocky terrain is not able to support the infrastructures of building and thus, will be less preferred. On the other hand the fertile agricultural land will fetch more value than a plot with no such prominent features.  

Demand for land

In simple words, “anything which is tradable and available in plenty possesses lesser value than something which is available in less volume”.

As the city’s prime locations are equipped with all facilities these locations attract investors and buyers. This is the reason that property prices in prime locations of any city are higher than prices in the suburbs. Same like, land plots in city outskirts, are available in plenty and are more reasonably priced. Plots which are located in areas that have close proximity with extensive economic activities such as markets or industries, etc., command higher prices.  

Floor Space Index

Floor Space Index (FSI) is a vital factor which has a strong influence. It is determined by plot size and width of the road. It denotes how much space in a plot can be utilized for construction. The FSI is restricted by the zoning code and impacts the land value.

Present and future land use

This is also a crucial factor for land pricing. The government or development authorities of the city usually place restrictions on the kind of development that can be done on the land. Land value is also fixed by the land use permitted in the land premises. That’s why Industrial or institutional land use attracts higher prices.

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