What is a property and what are its characteristics?
A property is understood by everything that is built with foundations on a lot, therefore, it is immobile. To be able to carry out a property on an investment lot, a building permit is needed. Therefore it is considered as an inseparable set of a building and the land that supports it.
Economically speaking, this product is made by two production factors: land and construction. A question for the developer is the optimal combination of building and land, particularly with regard to building density.
The land or the lot as such is also considered a property, its value lies in the use it may have, mainly when it enters as an intermediate good in the production process of another good.
Characteristics of the properties:
The location results from the use of the property on a land or investment lot. It is not specific to the real estate sector, as it is also due to job offers or public or private services.
This specific characteristic implies that the markets for these goods are located in specific places and the buyers of the real estate are the ones who must move to them.
The localized character is taken into account by economic analysis in the different conceptions of space. The demand for a property is theorized by the location of agents such as households in terms of their accommodation and companies in terms of their production premises.
This is a physical characteristic of any property that comes from the ground and the construction. Construction is an activity that pays for itself, that is, it loses its value over time. However, this depreciation is offset by the investment.
The durability of the properties refers to the fact that over time it can generate a service that corresponds to the use of the property. This unique characteristic is what distinguishes real estate from expendable products, which are those that disappear when they are used for the first time.
The service that is generated by the properties has an economic value, which gives the properties the dimension of real assets.
There are two types of paying for the use of a property: paying for it as it is consumed, that is, renting it and paying “just” or paying for everything by purchasing a property. This economic expression of the value of the service is the rent or the sale price.
A heterogeneous property can be considered according to its use: residential, offices, agricultural, industrial production, private or collective service, etc. For the same use, they are also differentiated by location and physical characteristics such as size, age, condition, etc. or even by market characteristics: available or occupied. The heterogeneity of the goods prevents them from being perfectly substitutable.
A property is first of all heterogeneous in terms of its use: residential use, office use, agricultural or industrial production activity or private or collective service (schools, hospitals, churches, etc.).
If you are about to acquire an investment lot or any type of property, remember to have all these characteristics present to be able to make a smart investment for your future.