Your property's value determines how much profit you'll gain when you sell it. In addition, the property value also determines how much rent or lease to charge your clients. As a result, you should be more careful when building your property value.
This blog explains the factors that help measure your property's value. In addition, you'll also learn about the tips that can help you improve the value of your real estate business.
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What Determines a Property's Value in Kenya?
Location is the most important factor determining the initial price of land in Kenya. In urban centres, the land is more expensive than in rural areas. In addition, land that is near social amenities like water and electricity is also more costly than others.
Properties near big schools and universities also cost higher than others. In addition, crops and minerals have higher costs if the land has cash. In short, land with high financial yields usually has a high asking price. Therefore, if you are starting in the property business, it's important to choose a location that has growth potential.
Remember that the location of a property can be the difference between a valuable asset and a liability.
New properties(buildings) cost higher than old buildings. However, land appreciates over the years, but buildings depreciate. But the rate of the building's depreciation depends on the level of maintenance.
Therefore, an older property will have a higher value if it is in good condition and is located in a desirable neighborhood. If raw land is near social amenities, its value will increase at a higher rate as time goes by.
The type of property
The type of property also determines its value. For example, a one-bedroom apartment will be worth less than a three-bedroom house. In addition, raw land with nothing will be less valuable than land with cash crops, minerals, and water.
Furthermore, commercial property is more valuable than residential property. Therefore, you can invest in either commercial or mixed-use developments.
The size of the property will also affect its value. A small plot of land will be worth less than a large one. In addition, a three-bedroom house will be more valuable than a one-bedroom house.
A big plantation of cash crops will also be worth more money than a small plantation. Therefore, the larger your land or property, the more valuable it will be.
The condition of the property
The property's condition is one of the most important factors in determining the value of a property in Kenya. If the property is in good condition, it is likely to be valued higher than a property that is in poor condition.
The property's condition also affects the amount of money a buyer is willing to pay for the property. Therefore, always ensure you maintain your property as it will increase its value. If any of your tenants choose to sublet their apartment, ensure they know the rules about maintenance.
The amenities and infrastructure in the surrounding area
There are a few key amenities and infrastructure factors to consider when determining the value of a property in Kenya. The first is the availability of water and electricity. If a property is located in an area with reliable water and electricity, it will be worth more than a property in an area without.
The condition of the roads also determines the value of a property. For example, if a property is near a well-maintained road, it will be worth more than a property near poor roads. The third is the availability of schools and hospitals. Suppose a property is in an area with access to quality schools and hospitals. In that case, it will be worth more than a property located in an area without access to these amenities.
Since you've seen how valuers evaluate your property's value in Kenya, you'll now make the right decisions when you are buying your property in Kenya.
Here is our guide on buying your first property in Kenya. It will help you make the right choices during property selection and buying.
Frequently Asked Questions
What are the major factors affecting property value in Kenya?
The location, age, condition, and size are the major factors determining property value in Kenya. The location carries a huge weight because a good house in deep rural areas will be worth less money than one in urban centers.
How do I value an income property before buying?
If you want to buy an income property, you should ask the current owner about the monthly income from the property. You should follow the 2% rule to evaluate the buying price. The 2% rule in real estate insinuates that 2% of the property's purchasing price should equal the monthly rent. For instance, if the monthly rental income is Ksh. 100,000, the purchase price should not exceed, Ksh.5 million
Can the neighborhood affect the value of the property?
Yes. A three-bedroom house in Karen will be more expensive than a three-bedroom house in Athiriver. This difference is due to the neighborhood since Karen residents have a higher social class than Athiriver residents.