How Do You Quantify a Fabulous View?

A house with a fabulous view can be hard for a home buyer to resist.  It may be the distant mountains, or a lake, or the city lights seen from the living area of a home.  There is a price, but the hazy part is figuring out what is the added value.

Estate appraisers and analysts may help but there is no simple answer.  Andy Krause, a real estate data scientist at Greenfield Advisors in the U.S. did some work on this: “It’s somewhat subjective” he says.  What makes a better view?  All views are not equal or valuable and a view from one location may not be the same with another.  For example, a view in KL Sentral condominium (“condo”) that overlooks a green space may cost more than that faces another condo unit of another block.

In Malaysia, we have guidelines on development but invariably these are compromised for various reasons – especially under the previous government.  What if you purchase a house in a low density environment and suddenly there is a high-density condo development (40 stories up) next to you?  Imagine people looking through your window, or into your garden?  A view of greenery or secondary forest is now turned into two concrete blocks (40 stories)!  This happens in Bangsar, Damansara or other parts of Kuala Lumpur.  How do you determine a fair compensation?  If you try to stop the development, the “powers that be” will tell you don’t waste your time and money.  The developer is well connected to MO1.

So how do you price different scenic views for compensation?  Krause who builds automated valuation models estimated five (5) different types of view (for Seattle):

       i.          add 5% to 10% (of existing value of comparable house) for a house on flat ground with an unobstructed view of an open space or park.

      ii.          add 10% to 30%, for a house partially up on a hill with an unobstructed view.

     iii.          30% to 50%, same as (ii) but perhaps you have a lake view.

     iv.          add 50% to 75%, where the house is on a hill with unobstructed cityscape or open vista.

      v.          75% - 100%, where there is a stunning view of the ocean or a big lake.

A view can be one of the most attractive aspects of a house.  You may have paid a price for a scenery that you and your family had hoped to enjoy.  Then comes a developer and lax regulations that obstructs your view, surely the developer and/ or condo purchasers now have to pay a fair compensation to you?

Reference:

Love That House’s View? By Marilyn Lewis, April 4, 2018, nerdwallet.com