landvalue

Land value is the value of the land itself, independent of any structures or improvements. It reflects the land’s location, size, topography, and natural resources, as well as the potential uses deemed permissible by law and market demand. It does not include the value of buildings, roads, or other enhancements.

Several factors influence land value. Location and accessibility are primary; proximity to employment centers, transit, services, and amenities increases value. Zoning, planning restrictions, and development rights determine usable density and function. Infrastructure quality, environmental constraints, hazard risk, minerals or resources, and legal status (ownership, easements, and taxes) also affect value. Externalities from neighboring land use, such as parks or pollution, can raise or lower value.

Valuing land typically uses appraisal methods that separate land from improvements. The market approach compares recent sales of similar unimproved parcels. The residual or development approach estimates value based on the anticipated worth of the site after hypothetical development, minus construction and financing costs. The income approach may apply in special cases where the land itself can generate rent or royalties, though it is less common for raw land.

In real estate markets, land value is a component of total property value; the remainder comes from improvements. In urban economics, land value tends to be higher near city centers and falls with distance, influenced by accessibility and regulatory factors. Public infrastructure and policy can shift land values through taxes, zoning, and subsidies.

Policy uses include land value taxation in some jurisdictions, intended to capture the unearned value created by location and public investment. Planning and infrastructure investments can also raise or lower land values by altering desirability and development potential.