Property Investment Markets

Investment property is real estate property that has been purchased with the intention of earning a return on the investment, either through rental income, the future resale of the property or both. An investment property can be a long-term endeavor or an intended short-term investment such as in the case of flipping, where real estate is bought, remodeled or renovated, and sold at a profit.

Real estate or immovable property is a legal term encompasses land with anything permanently affixed to it. Real estate (immovable property) is synonymous with real property called realty, in contrast with personal property (also sometimes called chattel). There are many types of property available for an investor and a variety of interests in such properties. Millington (1982) identified them as freeholds, short or long term leaseholds, ground rents, offices, shops, factories, warehouses and each of these interests or rights or types of property will have different features which make them more or less attractive to investor depending upon circumstance and the requirements of the particular interests. Property is thus seen as subject of ownership which concerns the right of individual, persons, sovereign power and the exercise of such rights of ownership are use and the nature of such rights are subject to influence human activities. The property types include industrial, agricultural, commercial and residential. A residential property which is the focus of this study is a multidimensional good differentiated into a bundle of attributes that vary in both quantity and quality (Can 1990).

 

The word "value" could command different meaning to different people depending on the context within which it is used. But value in real estate is the present worth of anticipated future benefit from ownership. It is the capacity of an economic good to command other goods in exchange. It also represents that price at which demand and supply coincide in the open market. Value then is determined by the intersection of demand and supply and for an object to have value, it must possess four elements or ingredients of value which are scarcity, utility, demand and transferability. Extrinsic value constituted of objective value as molded by the market forces of supply and demand. By contrast, intrinsic value is a measure of objects inherent utility to render services or satisfaction in use. Other concepts of value include that of Ricardo (1817) and Mill (1848).

 

The nature of value include market value, mortgage value, insurance value, compensation value, rental value, going concern value, liquidation or forced sale value, e.t.c. The concept of value for the purpose of this study has been taken as the amount of money which the property will bring to the owner if let or leased and this can be expressed as the rental value of such building determine at the lowest point of profitable production.