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Originally Posted by Spitfiredude
2.5 times what it was built for? Can anyone explain why this happened?. Not too much in the immediate vicinity is/has changed, but Block 12. This is what crashes real estate markets. When you buy a new car it immediately depreciates in value. A property should as well. The only things that can make it appreciate are improvements or location. I understand this is brand new and could be sold for $60-$70 mil, but over $100 mil...wow.
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Why would property depreciate like a vehicle? Assets held as property do not depreciate in such a manner, on the contrary, they typically appreciate in value. During an era in which the market plummets, property will lose value but it is not experienced evenly. Some areas lose much more value than others (exurbs/suburbs vs central locations - exurban/suburban properties lost more of their value). Beyond that, real investors are seeking long-term profits. They are not in the game for limited spans of 1, 2, 5 or even 10 years. This property appreciated because the leases associated with it will generate enough revenue over time to justify the cost of the acquisition. The area will be transformed over the next few years with renovations to Sun Devil Stadium, addition of Marina Heights, Block 12, USA Place, new condos and apartments planned around Mill and Rio Salado, etc. Most importantly of all, a steady source of income will be associate with this development for its new owner.