WHY SOME REAL ESTATE PRICES WILL NEVER DROP EVEN DURING HARD TIMES.

WHY SOME PROJECTS PRICE WILL NEVER DROP EVEN DURING INFLATION.

 

Real Estate generally deals with the commodity of limited supply such as land, apartments, standalone houses, and commercial spaces. It tends to correlate with its prices with inflation. If supply remains constant on an ever-growing population, demand always supersedes supply. An increase in demand always creates an increase in price.

Many people state that during downtime, prices of real estate have to drop. That is not always true on especially on a real estate property that focused on:

 

1.      Property Location:

Property location is important, especially if in an area with a growth curve. Such as areas with a high standard of social amenities like shopping centers, security level, transport, and communication development level.

Precise property location of the property in the area of growth is also something to consider since the property that does have a better view of the area fetches more compared to another in the same area but has a limited view or even privacy and quietness if so close to the busy road etc.

Surrounding neighborhood does influence price big time. This is because a property near a developing slum area does reflect opposite on the price growth. As the slum grows so is the downward price of the once a classy suburb. The immediate effect is people start moving out. Or a mansionnate or bungalow situated in the middle of tall storey buildings will fetch lower compared to another in an exclusive area.

 

2.      Property Components: 

Price is not only communicated in figures but has to be seen on the touch of the property. This is in the fixtures, fittings, and finishes. A project with big brand names attached to the firms or people who were incorporated into the final project. The project never loses its value since its worth is communicated in every touch on it. Buyers can see professional and classic touch from foundation to roof and in every detail of the house. This 'sizzling' gold touch will make the house stand out even in a recession, making the project fetch above the market rate especially when others are dropping.

Worth and value are key components when incorporated in a project, no matter the inflation it will still fetch its required price. The value of a project does communicate it’s a sense of importance to the client while worth will loudly speak of itself as the cost of production. Serious investors always know that there is no right price for the wrong product.

 

3.      Developer:

This is different from above in that a well market branded developer can decide to do a project from scratch to completion. By the market position of the developer's track record makes it a score. On ceteris paribus the developer is known to deliver without compromise. The project's connection to the developer always maintains its value as it is known of development with brand names such as 'Simon Property Group', 'Trump', 'Hilton' etc. Such developers have built their brand to a level that their properties are customer pull. Thus such projects get to be sold out while in an off-plan at prices which are even higher than other developed projects in the market still calling out to buyers.

The other is where a developer decides to incorporate brands in every input into the development. This is to communicate to the investor that project's worth as discussed above in the 2nd point. Where the developer ensures the project has state of the art fittings and finishes. This may be done through having fine cut granite tops from Egypt, golden coated taps, etc.

 

Due to the high volatility state of money due to its time value, the price of good projects will soon be pinned against precious and rear stones such as gold and diamond. All this is a move a match to its worth and value. Not all projects will drop with a drop in a recession some will most definitely be able to fly high.

 

Author: 

Simon Kaba

symonkaba@gmail.com