Real Estate Evaluation in the Turkish real estate market means valuing the property at a specific date. Real estate assessment is one of the most important fields that should identify newcomers to the real estate industry, particularly to the exciting Turkish real estate market, booming in recent years and attracting investors in real estate. However, real estate investment in Turkey is a diversified investment worldwide, with returns growing as the risk increases.
Therefore, the probability of investing in Turkish real estate depends mainly on the investor’s quality and the magnitude of the risk and return on investment expectations, including that of the investor, which decides the viability of investing in real estate.
The rise and decrease in value in real estate
For a variety of factors, the value of the real estate increases annually, including developing infrastructure, economic development, growing cash flows from real estate, capital investments in real estate, the positive effect of inflation, the impact of supply and demand on the real estate market, the modification and decoration of real estate, and the announcement of new renovations and features.
The explanations for the decrease in the value of the property are the forced selling of the property, the lack of continuous maintenance, conditions of supply and demand in the real estate market, economic obsolescence, and change in government regulations, the adverse effects of the infrastructure or the degradation of the conditions in which the property is situated.
Factors affecting real estate value
Natural variables: where there is a direct effect of the environment on the value of the land.
Economic factors: where real estate value is related to the cycles of the economy.
Laws, regulations, and laws: The value of real estate is influenced by laws, regulations, and laws relating to building, demolition, leasing, licensing, privatization and other factors.
Economic and social circumstances: average income, public taste, and other factors that influence real estate valuation.
Alternatives: where the prices of property change concerning the cost of opportunity.
Supply, demand, and competition: The prices of property are influenced by market supply and demand.
Place: where property prices are determined by the property’s location and total area.
Evaluation of real estate investment
Determine the seller’s requested amount.
Support the buyer to determine the purchase’s fair price.
Determine the value as part of an estate or shareholding in a business of a specific property.
Determine the mortgage financing value, which is usually a proportion of the property’s market value.
Determine the amount of insurance on the property required.
Determine the expense of errors in building up a property as part of a lawsuit or settlement process.
Determine the loss of property by fire, storms, or earthquakes.
Land value for calculating income.
When selling land, assess real estate taxes.
Types of real estate values
Market value: in an open and competitive market, the approximate value of the land.
Selling price: the price at which the actual sale occurs, which is different from the upward or downward market value. The sale price is affected by the seller’s or buyer’s ability to conclude the deal within a period.
Real estate evaluation
Method of estimating the cost of construction (replacement value): this is a statement of the importance of building a comparable property at current market prices and then subtracting the value decrease due to depreciation, plus the value of the site as if it were vacant.
This approach is based on current market prices for the selling of other properties, with reasonable modifications, within a comparable comparison of the property under assessment, by deducting the value of the products, representing an advantage in the comparative property.
The method of translating the estimated future profits of the asset to the value of converting the income into capital is based on the concept of anticipation of the investment’s future gain. This is where the value is equal to the sum agreed by the buyer to pay for the asset’s value, which is the present value of all future cash flows.