Land prices in Germany have a wide range: from a few euros per square meter in the countryside to over 1,000 euros per square meter in popular city areas. But how can the value of a piece of land be predicted as accurately as possible before its sale? What role do location and property suitability for building play?
Land valuation – ground values as a guide
Whether there is a high demand for a specific location or not, can be seen from the Berlin real estate prices in each district. But the ground values of the municipality reflect the price levels as well and represent a first indicator of land values. The Berlin property market value of a parcel of land however, should not be automatically equated with the Berlin property price and value.
In practice, the market value of the Berlin land is often 10 to 20% above or below the ground value.
Value of the land – the importance of micro-location
Each plot of land in Berlin is unique and has potentially a different value. For example, a seller will receive more money for its piece of land in Berlin, let's say than the neighbour, if its Berlin property has a better view (e.g. not obstructed by other buildings). Therefore, in the location assessment, the macro factors (such as public transport connections) are indeed important, but the micro factors too have to be considered (e.g. Is the site flat or does it has a slope? Is the soil contaminated?).
Suitability for building – a crucial factor
A really important aspect for the determination of the land value is the suitability for building. Without the possibility to build on it, a plot of land in Berlin is almost worthless. A piece of land in Berlin for which a zoning plan prospects a future construction (building site) is already worth more, even when the actual development is still pending.
The highest value for a piece of land in Berlin is reached when a development plan already exists and allows extensive construction.