Location in real estate is the site, neighbourhood or position of the earth where a property is situated. Location can be an area, neighborhood, community, street, etc. it is the point where a property sits or is built.
Location is a very important factor in the real estate market as it dictates the pattern of values. Because of its fixed nature, a property may be by design or accident of ownership located in a particular user zone such as residential, commercial, industrial etc. or in a low, medium or high density and consequently rich or poor neighborhood. Location represents a unique factor in each estate because it is unchangeable whereas most other features can be altered by investment and improvement.
The uniqueness of location is only qualified to the extent that other properties may offer comparable advantages of position. In this circumstance, we can identify comparable property markets such as Ikoyi/Victoria Island, Alaba, Eric Moore, Bode Thomas, Apapa or Ikeja GRA’s and Ajegunle/Mushin/Shogunle property market all in Lagos State Nigeria.
A property that has a wide comparable location advantage will command a wider market as its value will be more readily determined and as such will be more easily dispensable.
The Best Locations:
The best locations for a house are areas that serve its highest and best uses. This can be attributed to residential, commercial, industrial or agricultural land use. A location should be able to benefit the type and nature of development erected. Residential houses are best built in a residential neighbourhood with a good comparative advantage over other neighbourhoods.
If residential houses are built in a commercial zone, the property may not fetch enough revenue for the owner, to develop a house in a serene, tranquil, friendly, and pollution-free neighbourhood is to have the same locations allotted for only residential uses such as GRA’s, small estates, residential layouts etc. rather than areas with mixed land uses.
Development of commercial buildings such as shops, offices, showrooms etc. amounts to building in neighbourhoods with high-density human traffic which on the other hand is tantamount to generating noise pollution, vehicular sounds etc. that may not be healthy for residential habitation, same applies to industrial and agricultural uses.
Location affects the value of property in many ways such as the rent payable, people’s perceptions of houses built in certain locations, user preferences, the extent of building functionality, taxable houses, the possibility of easy property disposal, level of user demand, level of infrastructural assemblage, among others, all these affect the location advantage which translates to the extent of value placed on houses in the said location.
What Makes a Bad Location and Why’s Some Location Good?
Good locations are neighborhoods that command huge rental or sales demand while bad locations are areas with potentially delayed rental or sales demand. While people rush to secure a space in certain locations, other locations may find it difficult to get enough clients (tenants, buyers or developers) periodically.
A location is good when houses built command higher rents due to high competition for the area. When people are willing to pay for accommodations, buy or build a house in a location, that location is termed good. Such locations are profitable to the land and building owners.