The land real estate market is the foundation of all property markets and one of the best asset classes for any investment in real estate. Land real estate includes raw parcels, undeveloped or underdeveloped land, as well as developed buildings such residential, industrial, and commercial properties. Selling and developing land can be a profitable investment, whether it is for agricultural purposes, residential or commercial use, recreation, etc. The article discusses land, including its different types, potential investment, the factors that affect the price, as well as the buying and selling process.
Land Real Estate is a type of property.
The term land real estate is used to describe parcels of urban, suburban or rural land that can be developed for a variety of purposes. Land is the most basic form of real estate. It can be utilized for recreational, agricultural, and construction purposes. The value of land can increase over time, depending on the location, the zoning and development possibilities, as well as the regulations governing the use of the land.
As the population grows and urbanization rises, demand for land may increase. This could lead to a potential appreciation. Owning land is a versatile and valuable asset, whether it’s for investment or personal use.
Land Real Estate Types
The land real estate market can be divided in several categories based on the intended purpose or location. Different types of land provide different opportunities for development and investment.
1. Residential Land
The residential land is intended for a housing development or residential property. The land can be zoned to allow for the construction of single family homes, multiple-family housing, or any other type of residential use. Land for residential use can be found in urban, rural, and suburban areas, with different investment opportunities.
Urban Residential Land is land that is located in the city center or close by. This type of land is very popular today because it is close to housing demand and population growth. Usually, it is used for the construction of single-family houses, apartment buildings, or townhouses.
Suburban Residential Land This is land dominated by one-family houses and lots that are larger in size than those found in urban areas. The suburban area could be zoned to allow for residential multi-family developments.
Rural Residential Land – rural land is often larger and cheaper, allowing more people to live further away from the city center. People who are looking for more space or prefer a quieter lifestyle may be drawn to rural residential land.
Developers and investors buy residential land to build housing because there’s always an increasing demand for homes and apartments.
2. Commercial Land
Commercial property is land that can be used to build commercial structures such as hotels, offices, shops, or any other type of business. You can find commercial land in both urban and suburban areas. It is typically purchased with the intent to develop a business or make an investment.
Land for commercial use in the city center: this land is located within the urban area or town centre and may be developed as office buildings, retail centers, mixed-use development, with residential, office and retail uses.
Suburban Commercial Land. Commercial land along highways is ideal for large-scale developments, including shopping malls and strip malls. These are usually larger retail and service companies.
Industrial Land Industrial Land is commercial land used to manufacture, produce, store goods and distribute them. It also includes warehouses. They are located near transportation hubs such as highways and railroads to make it easier to ship and receive products.
3. Agri Land
Land used in agriculture is for ranching and farming. Land of this type is vital for the production of food, raising livestock, and cultivating crops. Land can be classified according to its intended use.
Farmland: Often located in rural regions with fertile soil, and water access, this land is used to grow crops like wheat, corn or vegetables.
Pastureland is agricultural land used to graze livestock such as sheep and cattle. They can be either open fields or pastures.
Timberland is a forested area that may be suitable for timber production. Timberlands are often found in rural or remote locations, and have a lot of trees. They can be cultivated forests.
As a general rule, agricultural land is evaluated based on its quality, productivity and climate suitability. Land is needed by investors and farmers for operational or long-term investments.
4. Land for Recreation
It is the land that’s used to play and have fun. This includes parks, camping grounds, fishing grounds and grounds for outdoor recreation. It can either be in rural or suburbia.
Land used for wildlife conservation, hunting and fishing. This land is usually covered in forests, rivers, lakes or other bodies of water and used for recreational purposes.
Land for Camping and Hiking: This is a land dedicated specifically to outdoor enthusiasts who enjoy hiking, camping and other nature related activities.
Individuals or groups interested in outdoor activities such as camping, hiking, hunting or spending time in nature will find recreational land appealing.
5. Raw Land
Undeveloped land or raw land is land that has not been developed or improved for a specific purpose. Raw land is often devoid of infrastructure such as roads, utilities and zoning. Raw land is attractive to investors and developers because they can either develop the property themselves or sell it at a later date for a profit.
Land that is not improved: This land has no existing structure or utilities, but it may be suitable for development in the future. Unimproved Land: This land is purchased with the intention of constructing residential, industrial, or commercial properties at a later date.
You can buy raw land for subdivision. The large areas of land are subdivided into smaller parcels for commercial or residential use.
The cost of clearing the land and zoning, as well as infrastructure construction, can make raw land an expensive investment.
The Value of Land
When purchasing real estate, investors and purchasers should take into consideration several factors that influence the value of land.
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The location of the land is a major factor in determining the value. Land in cities or close to major transportation routes is more valuable than land in rural or secluded areas. The value of land near parks, schools, businesses, or other benefits is also increased.
2. Zoning and Land Use Regulations
Local land regulations and zoning laws determine what you can do with your property. The zoning law can influence the use of land for residential, commercial or agricultural purposes. Often, land zoned as commercial or mixed use will have a higher value than that designated for recreation or agriculture.
3. The topography of the soil
Land is classified according to its topography and soil type (such as hills, valleys and flatness). A fertile land that has a flat terrain is more valuable to farmers. Lands that are susceptible to flooding or landslides have a lower value due to the added cost involved in developing or remediating them.
4. Accessibility
Land that is easily accessible to highways, major roads and public transport will usually be more valuable. Lands with poor infrastructure or remote locations that are difficult to reach will likely have lower demand, and therefore lower value.
5. Utilities and Infrastructure
Land value can be greatly affected by the availability of utilities such as water, electricity and sewage. Most often, developed properties that have access to utilities will be worth more than undeveloped land.
Land Real Estate: Buying Land
Land is so different than developed property that the process for buying and selling real estate differs. Both buyers and sellers are aware of the legal and financial aspects and the steps that lead to a final sale.
1. Due Diligence
The buyer must do their due diligence before purchasing land. This includes investigating the legal status of the property, its zoning and title, as well as environmental aspects. The buyer will be protected from any lawsuits or other unplanned events regarding the property.
2. Financing
It can be harder to finance land than a home or other commercial properties, particularly if the risk is involved in land development. Land buyers are able to get funding from traditional banks, private lenders or sellers. Loan terms will depend on both the type of land and buyer’s finances.
3. The Land Value Appreciation
Land appreciates over time, just like other assets. This is because of the increase in demand or the development for higher uses. This can be a great investment. While considering regional plans and market trends, land value fluctuates based on the economic condition and changes in zoning law.