When customers visit us, usually only one thing comes first: the new appearance of the future bathroom or their new kitchen. However, another question arises that probably remains rather reserved in the background – how is the value of a property actually influenced by a renovation?
Basically, the value of a property can be determined by various factors. The most important of these are the location, the size of the property and the structural condition.
The Location
Even before a house is built, location is a primary factor in determining the price of real estate property: the view, proximity to urban centers, public transportation and main roads. As a general rule, the closer the property is to an urban center, the higher is the price. But this does not necessarily apply everywhere. More often, hillside locations also show a trend toward high real estate prices – as long as they can be reached quickly and easily, such as on the Gold Coast or in Switzerland’s most expensive municipality, Kilchberg in the canton of Zurich. This is also the easiest factor to measure the demand for real estate. Demand and supply determine the price. The more people want to live in a specific place, the higher the property price will be.
The Size of the Property
This is probably the simplest price factor to calculate: the more surface area, the more expensive the property will be. However, the purpose of use also plays a significant role – for example, the price per square meter for the construction of an apartment building is somewhat higher than for single-family homes. Why? The floor area can be better used in multi-family houses. Currently, the average price per square meter in Switzerland is about CHF 7,400 for a house and about CHF 8,300 for an apartment (December 2022).
The Structural Condition
Apartments in old buildings are on average more than 20% cheaper than apartments in new buildings. The main factor here is the look and quality of living. Newly built apartments are usually brighter, in a contemporary style and more quiet. If you don’t like listening to the footsteps of your neighbors, it’s probably better to choose a newer home. Energy efficiency is also a factor, heating costs can be over three times higher in an old building compared to a new one. These costs are reflected in the annual energy bill. With new buildings, possible renovation costs are also a long way off, a point that should not be ignored. If a property must first be made «habitable» and free of defects for the next few years, e.g. by renovating the basic fabric of the building or the heating system, it quickly becomes very expensive.
Nevertheless, a trend can be observed more and more, which originates from the United States: «House Flipping». Old properties are bought at relatively low prices and then resold after renovation. The renovation costs get calculated disproportionately. In some cases, renovated apartments achieve higher prices than newly built objects – thanks to the exclusivity. These projects are individual and unique, anything but “mass production”. However, this strategy only works if a property fulfills a minimum standard and, above all, if the appearance is creatively modernized. A guideline that applies generally, of course: exceptional things are rare and valuable. Energy efficiency in itself can be increased relatively easily. The possibilities are endless. As an example: Just by using an energy-saving shower head, you can save about 50% of the hot water consumption in a household.
The bottom line is that new or modern construction will increase the price of a property across the board. However, if new and old are combined through renovation, very lucrative opportunities arise.
When does a renovation become profitable?
As a rule of thumb, renovation costs should not exceed 70% of the property purchase price. But this is easier said than done, as some costs cannot yet be estimated when planning the renovation. It should never be calculated strictly by this formula. If basic renovation work is necessary, it quickly becomes costly. A new bathroom, tiles or kitchen, on the other hand, can increase the value of a property very easily and effectively. It is worth planning renovation projects carefully with the right partner at your side.
Come to us
With our range of bathrooms, wall and floor coverings, kitchens, household appliances, building materials, lumber and tools, we can help you with construction projects of all kinds. We always try to provide you with a versatile range of products to choose from. This way, we can guarantee that we can offer products for every lifestyle, age, budget and application, and that your construction project is guaranteed to succeed – cost-effectively and with high quality. We want you to have no limits when it comes to realizing your ideas. Our experts are always at your side.
Visit us at one of our locations, or order simply and conveniently in our online store: shop.bringhen.ch.
We look forward to seeing you!
Your Bringhen Group