Economic Characteristics of Real Estate
The land also has some distinct economic features that affect its value as an investment:
Scarcity: While the land is not considered uncommon, the total supply is fixed.
Improvements: Any improvements or modifications to the land or a building that change the value of the property are called an enhancement. Private-type improvements (such as residences and fences) are referred to as property improvements. Public improvements (e.g., roads and sewage systems) are called land improvements.
The permanence of investment: When land is improved, a substantially fixed expenditure is represented by the overall capital and labor used to create improvement. While a building can be razed, modifications such as drainage, power, water, and sewage systems appear to be irreversible because they cannot be economically removed (or replaced).
Location or area preference: Location refers to the choices and tastes of individuals about a given place, based on variables such as convenience, reputation, and history. Place (thus the saying, “location, location, location!”) is one of the most significant economic characteristics of a property.
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