The Concept of land in Real Estate

In general sense, land is the solid dry part of the earth’s surface. Often we think of land as only the surface of the earth. But it is substantially more than that.

      A developer looks at land as capital, where as the planner views land more in terms of space. Others refer to land only in the physical sense, such as a farmer who considers the physical characteristics and productivity of the soil.

      It is convenient to emphasize on the followings about the concept of land:

1.       The economic concept of land: In this sense, land is defined broadly to include the surface with all its characteristics-water, soil, mineral deposits and other natural phenomena including climate (Wind, rainfall, ice etc). Except the natural characteristics, the economic concept refers to all manmade improvements, such as irrigation ditches, waterways, highways and streets. In other words, land is considered to be a part of nature that is identified with the geography of an area like mountains, lakes, forests, soil and other resources. In sum, the economic concept of land as all natural and man-made structures subject to use, possession and control.

2.       Land as space: The characteristics of spaces as the controlling element in landownership. Owners and planners attempt separate incompatible uses of space, for example, commercial districts and single family dwellings. At the same time, land must be allocated to the less desirable uses, for example, sanitary landfills. Much of our legislation, regulating and controlling landuse leads to the lost acceptable, efficient use of space.

3.       Land as a resource: The real estate economist’s views land as a scarce resource that should be maximized and allocated to the most efficient use.

The developers add capital to land in order to produce an income properly. There is some optimum land investment appropriate to an office building, a new apartment project. “Over investment” in land may lead to uneconomic operation and an eventual mortgage foreclosure

Even farmers and timber companies view land as an economic resource necessary for the production of income.