Location is not the only decisive factor in real estate
Location is just one of the factors that influence real estate value. As in Monopoly, size, condition, infrastructure, inflation and interest rates also play an important role in reality.
Size and condition are important factors
In the classic game Monopoly, the most expensive properties are often also the largest with the highest revenue potential. This principle also applies in reality. As a larger residential or commercial property generates higher rental income or sales prices, the area of a property is a key factor in its value.
The condition of a property also influences its value. Newer properties and those that have been well looked after usually have a higher value than older or dilapidated buildings. In Monopoly, the value of a playing field can be increased by building houses and hotels. In reality, it is new buildings, renovations, modernizations or the construction of extensions that increase the property value.
Infrastructure as a locational advantage
Other decisive factors in property valuation are the infrastructure and the quality of the neighborhood. A good infrastructure with schools, shopping facilities, public transport or parks increases the property value, as does an attractive neighborhood with friendly neighbors and a safe environment. In Monopoly, the quality of the neighbourhood is optimized simply by buying entire streets or districts.
The influence of inflation and interest rates
In addition to these factors, economic aspects also influence the real estate market. This depends to a large extent on the development of inflation and interest rates. Although the inflation rate in Switzerland is currently at a level that the Swiss National Bank (SNB) equates with price stability, the SNB continues to keep a close eye on the challenging overall monetary policy situation.
The value of Swiss real estate is currently determined by conflicting factors. Demand on the domestic rental housing market is supported by strong population growth, particularly in urban and central locations, which is mainly due to immigration from abroad. The considerable demand for living space is offset by subdued construction activity, which is reflected above all in the long time it takes to obtain building permits. This initial situation tends to drive up prices, as the expected rent increases enable owners such as pension funds and investment foundations to generate rising returns. At the same time, however, real estate prices are coming under increasing pressure due to rising interest rates.
Real estate valuation taking all factors into account
Real estate valuation is a complex process that requires thorough analysis. In addition, active real estate management is required to ensure the long-term profitability of real estate investments. A careful evaluation of all relevant factors makes it possible to realistically assess a property value and make well-founded decisions.
Given the complexity of the task, real estate investors, just like Monopoly players, should always get a holistic picture. Real estate experts can help with expert valuation and advice.
