Factors affecting value

Factors Affecting Value - Factors affecting value are all characteristics and circumstances that positively or negatively influence the market value of a property. These include location, condition, amenities, lot size, zoning regulations, and the current market situation. Experts and appraisers systematically evaluate these factors in accordance with the guidelines of the Real Estate Valuation Ordinance (ImmoWertV) to arrive at a market-based fair market value. Owners who wish to sell or mortgage their property benefit from knowing the most important value factors and influencing them in a targeted manner.

Property-Specific Value Factors

The location is considered the most important value-determining factor and is divided into macro-location (city, region, infrastructure) and micro-location (street, neighborhood, orientation, noise pollution). The condition of the building includes the year of construction, degree of modernization, and technical features-a comprehensive renovation can increase the value by 20-40%. Other property-specific factors include:

• Living space: Calculated according to the Living Space Ordinance (WoFlV); terraces and balconies are included on a pro-rata basis (25-50%)
• Floor plan: A functional, modern layout increases demand; convoluted or dark floor plans depress the price
• Energy efficiency: Energy efficiency classes A+ through H influence running costs and thus the purchase price-an increasingly decisive factor in purchasing decisions since GEG 2024
• Features: Balcony, garden, parking space, underground parking space, elevator, radiant floor heating, smart home technology
• Lot configuration: Degree of development, buildability according to the zoning plan (floor area ratio, floor space index, building type)
• Building volume and potential for infill development: Unused building rights (e.g., potential attic conversion) significantly increase the property value

Market and legal factors

In addition to the physical characteristics of the property, external factors significantly influence real estate value:

The interest rate level determines financing feasibility and thus demand-a 1 percentage point increase in interest rates reduces the purchasing power of potential buyers by approximately 10-12%. Regional economic strength (employment rate, business relocations, population trends) influences price trends in the medium term. Economically strong regions with an influx of skilled workers-such as the Nuremberg metropolitan region-exhibit more stable value trends in the long term.

Legal factors can significantly influence value:

• Historic preservation status: Higher renovation costs, but tax advantages under Section 7i of the German Income Tax Act (EStG) (increased depreciation of up to 9% per year for the first 8 years)
• Existing Leases: Long-term leases below market rent or rent-controlled old leases lower the sales price; vacant properties often command higher prices when there is strong demand from owner-occupiers
• Contaminated Sites: Listing of contaminated sites in the encumbrance register can impair financing and incur demolition costs
• Registered easements: Right of way, utility rights, and third-party residential rights directly reduce the value
• Building encumbrances: Assumption of setback requirements or building encumbrance commitments can restrict developability
• Issued building permit: Significantly increases the value, as planning risk is eliminated

Focus on energy-related value factors

Since the tightening of the EU Energy Performance of Buildings Directive (EPBD) and the GEG 2024, a building’s energy efficiency has become vastly more important. Unrenovated buildings with a final energy demand exceeding 150 kWh/m²a (Classes F, G, H) command price discounts of 15-25% on the Nuremberg market compared to similarly sized, energy-efficiently renovated properties. Buyers factor in renovation costs (typically 400-800 euros/m² for a complete renovation)-and banks apply higher loan-to-value discounts for poorly renovated properties, making financing more difficult.

Practical Tip for Property Owners in Nuremberg

We recommend that property owners in Nuremberg systematically document the value-relevant factors of their property before considering a sale. In old town locations such as St. Lorenz or St. Sebald, listed building status has a mixed impact-higher renovation costs are offset by tax benefits (depreciation under Section 7i of the Income Tax Act). In growing neighborhoods such as Röthenbach, Langwasser, or Gartenstadt, potential for infill development is a strong value driver that is often not adequately reflected in the selling price.

We analyze the standard land values from the City of Nuremberg’s Appraisal Committee and compare your property with recent comparable sales from our database to realistically assess every value-relevant factor. Before a sale, we also recommend a targeted assessment of which measures for your specific property will increase the selling price with the best cost-benefit ratio-not every investment pays off one-to-one on the market.

Frequently Asked Questions

Which factor has the greatest influence on property value?

Location remains the most important factor determining value. In Nuremberg, the price per square meter can vary by a factor of 2-3 depending on the neighborhood-from approximately 2,500 euros/m² in outlying areas to over 6,000 euros/m² in premium locations such as Erlenstegen or Buchenbühl. Unlike the condition of the building or its amenities, location cannot be changed, which is why appraisers give it the greatest weight. Within a given location, however, micro-location factors such as street noise, orientation (south-facing garden), or neighboring buildings can shift the price by 5-15%.

How does energy efficiency affect value?

Since the introduction of the stricter EU Energy Performance of Buildings Directive and rising energy prices, energy efficiency has become significantly more important. Studies show that properties with energy efficiency classes A/B command a 10-15% premium over comparable properties in classes F/G. Unrenovated buildings with high energy consumption are valued at a significant discount, as buyers factor in the expected renovation costs. When making purchasing decisions, the energy performance certificate is therefore often just as important today as the floor plan and amenities.

Can negative factors be offset by modernization?

Many factors that reduce value can be offset by targeted investments: A bathroom renovation increases value by approximately 5-8%, a new heating system with a heat pump increases value by 8-12%, and a complete energy-efficient renovation (insulation, windows, heating) can increase the selling price by 20-30%. However, location-related disadvantages such as aircraft noise, poor infrastructure, or a declining population cannot be offset. We advise you on which measures offer the best cost-benefit ratio for your specific property.

What documents are required to assess value-relevant factors?

For a well-founded appraisal, we need: a current land registry extract (Sections I-III), zoning plan and site plan, construction plans (floor plans, sections, elevations), energy performance certificate, building insurance documents, proof of renovations (invoices, building permits), and for rented properties, the lease agreements and current operating cost statements. The more complete the documentation, the more precise the valuation can be-missing documents result in uncertainty discounts in the appraisal report.

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