This is based on a simulation model of price setting of an urban center, decoded and developed by Liases Foras. The theory describes that the price of a property is governed by four fundamental factors: Distance, Density (Economic Density), Surroundings and Product.
Kindly define the neighborhood profile (economic density), surrounding views and product grades to derive the price of the property based on prevailing market price of the city.
Theory
Every city maintains a specific price-setting at any given point of time. The change in prices of one point influences the setting and there by impacts the prices of other points. And a new setting of the price is formed.
That is the reason that the rationality or irrationality, whatever be the state of market, it sets in the prices of all the points across city at any given point of time.
It is a float and there is equilibrium in the price setting.
The quality of product (unit), the quality of demographic densities (neighborhood) and surrounding (Geographical attributes) gets integrated with distance to provide differentiating prices for differentiating products at same vector and for the same product at different vectors.
Price Productivity describes whether the prevailing prices are efficient or inefficient. Price Productivity can be measured with prevailing sales velocity and months inventory.
The optimum sales velocity is considered to be around 2.5% to 2.75%, providing a sales gestation at project level to be at 40-36 months. While the optimum Months inventory should be around 8 to 12 months and optimum rental yield should be around 3.5-5.5%.
