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An increase in a property's value over time.
Buyers and valuers consider location, permitted use, condition, comparable transactions and, for income-producing property, rental prospects. A higher expected rent or lower required return can support a higher valuation; deterioration or weaker demand can work in the opposite direction. Improvements can increase the value but also cost money, so the entire increase should not necessarily be described as passive investment growth.
Imagine an unchanged property valued at J$20 million and later at J$22 million. The nominal increase is J$2 million, or 10%, before selling costs, tax or other expenses. If the general price level rose by 6% over the same period, its inflation-adjusted increase is about 3.8%: 1.10 ÷ 1.06 − 1. No cash gain has occurred unless it is sold or another transaction takes place.
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