Could somebody explain this to me?

[Hodge]

My Father has a 100 acre farm he wants to sell. 45 mins from Melb CBD. Currently land in the area is zoned as rural but most likely will be zoned residential in the next 5 years or so.

Comparing recent sales in the area we notice that 5 - 10 acre lots of land sell for around $600k and 100+ acre lots around $1.1m.

I can't understand why larger lots of land sell for marginally more. I've asked several real estate agents in the area and they're not too sure themselves.

Is it just that smaller lots are more in demand? Why does the square meter rate drop?

Thanks

 

[D.T.]

Supply and demand, target audience etc

How many people can a) afford 1mil+ and b) would find 100 acres usable / manageable?

 

[westminster]

My Father has a 100 acre farm he wants to sell. 45 mins from Melb CBD. Currently land in the area is zoned as rural but most likely will be zoned residential in the next 5 years or so.

Comparing recent sales in the area we notice that 5 - 10 acre lots of land sell for around $600k and 100+ acre lots around $1.1m.

I can't understand why larger lots of land sell for marginally more. I've asked several real estate agents in the area and they're not too sure themselves.

Is it just that smaller lots are more in demand? Why does the square meter rate drop?

Thanks

It's like the bulk method form of valuation. Buy 1 item, Buy 1000 items and the 1000 items will be cheaper.

100 acres is good for farming but 5-10 acre lots are attractive to tree changers or equine made people.

He could look at converting his block into smaller but the cost of putting in services for all those 5-10 acre lots costs quite a bit which is the other reason why they sell for more - they set the price so that they cover those costs.

My smallest block buys have been my most expensive.

 

[Hodge]

Would this be the same outcome for residential land? Or nothing to do with zoning?

 

[westminster]

Would this be the same outcome for residential land? Or nothing to do with zoning?

Yes, no, sometimes

Scarcity, zoning, amenities, distance to CBD and location. All play a part to determining the value.

Generally the bigger the block the cheaper it is per sqm unless it has some extreme density upsides for the size.