It is no secret that The real estate industry in Mexico is attracting more and more investors and companies. due to its high profit margins and constant growth.
In case you are one of them, You need to master certain concepts that allow you to fully understand all aspects of the sector., as the meaning of real estate capital gains.
The concept of surplus value is broad and is of utmost importance when choosing between a real estate development or otherFor that reason, we created this guide to help you analyze and make informed decisions about the different properties you have on your radar.
What is real estate capital gains?
The real estate capital gains It is when the value of a property increases over a given period due to criteria such as location, building structure, demand, economy, surrounding properties, as well as its aesthetic and functional value.
It is worth noting that all types of properties such as houses, apartments, buildings, corporate centers, commercial and residential premises, and even stock investments, may experience an increase in their capital gains.
Types of capital gains real estate
If you want to invest wisely and make the most of your available capital, you need to carefully research the types of capital gains on a property, which are:
- Urban capital gains: It refers to the increase in property value over time due to factors related to an urban environment such as new infrastructure, communication and accessibility routes, or economic growth.
- Commercial capital gain: It is the increase in the value of a commercial property that has high potential as an asset. Factors such as proximity to business centers and the need for business space increase the value of the property.
- Social capital gains: It is related to community and social development. The construction of parks, medical centers, and educational institutions promotes an increase in property prices.
- Industrial surplus value: It is the increase in the price of a property associated with the areas of manufacturing, industry and logistics.
- Natural capital gain: It includes natural factors, ecosystems and geographic resources that represent an attraction for properties without being related to improvements in the building and that increase their price.
- Capital gains from property improvements: This occurs when the buyer makes significant renovations, applications, and modifications to the property with the goal of increasing its value.
- Capital gains from urban development: It is generated from the construction of new residential and commercial buildings that respond to a demand for expansion in urban areas.
Factors that determine capital gains in real estate
In case you are interested in investing in real estate, It is important to take into account the factors that value properties, regardless of the type of development they are.
Next, We list the factors that influence the capital gain of a property.:
1. Accessibility
The level of connectivity a house or apartment has with roads that facilitate access to key services such as clinics, hospitals, educational or sports centers increases the value of a property.
At this point, Ease of access to workplaces is also considered, corporate, shopping centers and entertainment areas such as parks and museums.
Similarly, accessibility is a key aspect that is of great importance to users, since it makes daily activities easier and is directly related to quality of life.
2. Security level
One of the elements that determines the capital gain of a property is the quality of its security systems.
Residential areas that have 24-hour surveillance, controlled access, security cameras and good lighting (like the properties in our portfolio), They represent a real estate investment with high capital gains.
Keep in mind that a good level of security is essential for everyone because it reduces risks, which is why it is taken into account when calculating the commercial value of a property.
3. High demand for properties
Buyers prefer those goods that are close to business centers and places of interest, which is why there are areas with greater demand for properties than others, since they are strategic.
So the value of a property is also subject to the supply and demand in the construction zone.
4. Urban development
If you want to make a good investment, It is advisable to evaluate properties located in an area with high growth potential (planned).
Urban development is a variable that has a direct influence on the valuation of the property, for that reason Your advisor should guide you on the projects under development. around the area in which you want to invest.
And what types of buildings are part of the planned growth? Schools, sports complexes, shopping centers, corporate centers, entertainment venues, restaurants, museums, parks, medical institutions, among others.
5. Basic services
In the real estate sector, public and private services are taken into account as a factor that determines the value of a home.
Because of this, Investors are increasingly choosing to invest in projects very close to mixed-use developments. (business parks, residential complexes, logistics spaces and health centers).
6. Economic and legal factors
The state of the economy and factors such as inflation and interest rates affect the capital gains of a property, since have an impact on the perception of a property in the real estate market.
Similarly, fluctuations in taxes and changes in legislation and regulations in the construction industry They are factors that directly affect the price of the asset.
How to calculate real estate capital gains?
To calculate the capital gains in the real estate sales, Take the current price of the property and subtract the initial purchase price. Then, divide the result by the purchase price and multiply by 100 to get the appreciation rate.
You can use the following formula: ((Final value – Initial value) / Initial value) x 100
Let's look at an example: imagine you bought a piece of land for $1.5 million five years ago. But now you discover your land is valued at $3.5 million. So using the formula, it would look like this:
((3,500,000-1,500,000) / 1,500,000) x 100 = 133%
This means that the property has increased in value by 133% compared to the price at which you purchased it.
Understanding how to calculate it will help you know the real value of the asset., which is essential to have an estimate of the profits you will obtain from the transaction.
On the other hand, calculating capital gains allows you to know whether the property you are interested in will actually increase in value over time or not.
How to increase the capital gains of your property?
To increase your property's value, it's advisable to choose a good location, optimize electrical, gas, and water installations, improve its architectural quality, increase security and surveillance, and perform preventative maintenance.
It should be noted that These tips apply to any building, whether it's a new or used home. If you want to sell a property for a better price than the purchase price, it's a good idea to consider the following recommendations:
- Analyze external factors: Urban infrastructure, its connectivity, accessibility, and the demand in the area are external elements that influence the value of a property.
- Choose a good location: High-demand, safe areas with growth potential allow you to set a higher price for the property.
- Performs property maintenance: The property must project a solid appearance, both in aesthetics and construction quality, for this reason it requires constant maintenance in details such as pipes, electrical installations, green areas, walls, ceilings, floors and finishes.
- Make changes: such as redesigning a house or apartment, adding additional spaces, or rethinking its layout. Remodeling directly influences the selling price of a property.
- Adapt to current trends: This way, you can be an attractive option for buyers who have specific interests, such as modern spaces, avant-garde architecture, open concepts, or sustainability.
Invest in an asset with constant growth and high capital gain potential
The real estate sector offers you a highly stable source of income through investments in various developments. Regardless of your capital, you can start today if you wish.
At Proyectos 253 we advise those looking for high-quality residential and commercial projects. real estate capital gains and we have strategic alliances with other developers to offer you multiple options. So if you're interested in this sector, contact us.
