The Essence of Equivalent Markets in Determining the Market Value of Land Property for Variable Planning Factors

Abstract

Abstract The leading local legislation act defining the spatial policy is the local development plan, the financing of which is the commune’s responsibility. The beneficiary of activities aimed at the transformation of the intended property use is its owner or its perpetual lessee – with lessees incurring the costs of adopting the local development plans through so-called zoning fees, the amount of which, often controversial, has become the source of numerous lawsuits. The presented problem of an outside-business and often radical change of land value corresponds to the market dilemmas in determining equivalent markets, and establishing price-setting factors and their impact on the value of real estate. Circles of analysts and appraisers determine equivalent markets radially. This means that the analyzed or valued property is the central point of the monitored area, incorrectly “enclosed” within the geometry of a circle. Such a perception of the dispersion of transaction prices does not reflect the actual nature of the market, as evidenced by the analyses of land property values according to their planning factors, carried out as part of the present paper. The focal point of the article is a continuous map of land value developed for properties located within the cadastral unit of Podgórze of the city of Krakow which indicates that it is not legitimate to arbitrarily take on the radial approach when designating equivalent markets, which was indirectly approved by Waldo Tobler claiming that: “Everything is related to everything else, but near things are more related than distant things” (Tobler 1970).