Expert: Real estate value is determined by more than construction costs

Urban value is created not only through private investment, but also through public spending, although it does not always return to the urban development system.

As Olaylar informs, Orhan Ercan, a member of the MART expert group, said this at the event "Fair Real Estate Taxation as a Driver of Sustainable Urban Development" held as part of WUF13 in Baku.

According to him, the key issue in urban development is not the volume of construction, but how urban value is created and distributed.

Ercan noted that land value is shaped by urban planning decisions, infrastructure investment and institutional factors, but a significant part of this value does not return to the urban development system.

"Urban value is created through public action - planning, infrastructure investment and collective decisions. The question is how this value is distributed and managed," he said.

According to the expert, real estate prices are determined not so much by construction costs as by the capitalization of land rent.

He added that, in many cases, a significant part of the urban value created is redistributed through the market in the form of speculative income and rising land prices, leading to an uneven distribution of benefits.