Redevelopment of Property

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Redevelopment of Property:  One property or an entire suburb!

  • Timing
  • The rate of development

redevelopement-graph

Urban Land Economics 2004; Jack Harvey and Ernie Jowsey

As can be seen from the above graph is that with the acquisition, the use of the building for income generation takes priority. The land presents a secondary value apportionment. Let us assume that the economical lifespan of the building is 25 years, which is presented by the figure Z.

  • R – presents 20 years on the time-line;
  • T – presents 23 years on the time-line;
  • Z – presents 25 years on the time-line;

The top line crossing above T – redevelopment, indicates that the value of the vacant site is larger and increasing, as the building value decreases to a negative figure. So the nitty-gritty of all property investment is the timing, as when to buy and when to sell or redevelop.

This is where the professional property valuer offers great value:

  • Market research on urban decentralization;
  • Demand for redevelopment of the subject area;
  • Social and economical hurdles to cross;
  • Cost of relocation;

Prior in making these decisions, a well informed overview of the localities in question are required. I suggest that at  point (R) on the time-line, the investor should have a clear understanding of the next best investment opportunity. An expert property appraiser, can add value to these rather tough decisions ahead.