How does the age of the building affect the appraised value?
The effect of the age of a property directly affects the appraised value, although its impact varies depending on the valuation method. For example, in the cost method, physical and functional depreciation as a consequence of the loss of useful life of the property affects the value in a linear fashion, reducing it year by year. On the other hand, using the comparison method, the age of our property will force us to look for comparables that are of the same age as our property, or to depreciate more recent properties to make them compatible.
In summary, and in general, the older a building is, the lower its value compared to a newly constructed building of the same characteristics and in the same area.
What types of reform are envisaged?
Within the wide range of actions, we can classify two types of refurbishment:
- Partial refurbishment, in which the distribution of the property is not modified, but it is updated with minor changes to adapt it to more modern tastes or characteristics. It reduces the functional deterioration of the property.
- Comprehensive refurbishment, in which the building is completely modified; with interventions in the distribution of spaces, as well as in the installations and even structural refurbishment. It reduces both the physical and functional deterioration of the property.
What impact does the reform have on the appraised value?
The impact of refurbishment on the appraisal value is very significant. According to our data, a partial refurbishment could increase the value of a property by between 15% and 20% in the most sought-after areas with the lowest supply of new construction, such as Madrid and Barcelona. This increase is even greater if the refurbishment is of an integral type, increasing the value by between 35% and 40%. In this comparison, and in general terms, a partially refurbished property has an appraisal value only 5% lower than a property with similar characteristics in new construction.
Is it worth refurbishing a house to sell?
There is no doubt about it. In the main capital cities, a partial refurbishment can cost around €350/m², while a full refurbishment would cost approximately €650/m². The average increase in value can be quantified at around €500/m² in the case of partial refurbishments, and around €1,050/m² for integral refurbishments. This leaves a return of €150/m² for partial refurbishments and €400/m² for complete refurbishments.
In any case, it is important to note that these figures are averages, and the individual outcome of each proposal will depend on factors such as the location of the property, its size, the depth of refurbishment required and the available supply of new construction in the area. For all these reasons, it is important to have a prior analysis in order to be able to analyse the possible return on investment.