Property prices on land
There is an old saying that "you get what you pay for", however with property that is not necessarily true as the same quality and size of property fluctuates very greatly in price depending on location.
For example a flat in central London will cost as much as a whole road of houses in parts of Wales and the North of England. A holiday property on the coast in many desirable places in Europe may cost as much as several just a couple of miles inland.
Clearly the majority of most property prices is the land or space, and the value of this is related to the supply and demand market price. On land this price is partly caused by shortage and partly by political restrictions on how much land and where it can be built on.
On land ground has a single level, the surface, although in cities where land prices are high, property may be built in layers or apartments going higher to spread the ground cost between many units.
Developers are often expected to provide infrastructure, in exchange for permission to develop, this could be roads, bridges, community buildings, schools, sports or other facilities, or combinations of these, which are given to the local authorities. This is possible because land without permission to build is considered to be worth far less than land that has permission to build.
Property is considered to be worth a price depending on what it could be sold for, and this is often in turn related to how much a lender will advance using the property for security. There is therefore a circular model, with feedbacks that sets the price. This is fairly stable, generally inflating the price in highly populated areas by a larger extent than in lower populated areas.
The effect makes it necessary for people to be paid more in these areas, which allows the pattern to continue. It has two other effects, within commuting distance to put up surrounding prices, and as wealth is built for many by inheritance of property, generally the people from populated areas become more wealthy than those from country areas.
Within populated areas, ultimately you get a split within society between those who can afford and those who cannot afford property, creating sub classes, and also generating lot of the feelings of inequality that fuels the rise in crime.
Where scarcity of land is the controlling factor to price it is extremely difficult to create first time homes and homes for people on lower salaries.
Space within the floating kingdom
Land as such does not exist, so all has to be created, however ocean space outside the wall and floating kingdom is intrinsically free. Within the floating kingdom, it has a greater value as part of a protected area, with services, community and added value.
As we construct islands there is a build cost, which can be looked at as two elements, the cost of creating the ground and the cost of the structure, although in practice these are overlapping features. It would be possible for example for a company to construct an island as a shell and to sell spaces for others to build within or on, in which case the cost of the structure on an island could be compared.
There are various technologies, for example the box structure that people will expect, producing in effect a large multi compartment ship that can be built in, up and on. In addition there is Pneumatic platforms, which in theory are less prone to move due to water swell, don't need to be built as solidly, and provide the opportunity to have lower cost large platforms allowing building at a lower level on a stable surface. The cost of providing the base to build on could therefore be far less for these, where no or little in island capacity is required.
Most Islands constructed within the ocean will have an 'in island' and 'on island' aspect, so in effect you can have an apartment block, and on top have a park, houses with gardens etc. You can also have in island facilities such as shopping centers, factories etc and on the surface a housing estate or any other development you could find on land. There are some developments however that are not practical on a floating kingdom, for example an underground railway or metro.
As on land the cost of creating different structures will vary, and multi level structures allow land cost to be in effect shared, although very large structures will cost more per unit in build costs. The same variables can be applied to island developments, with extra cost in making larger structures, but cost shared between many.
It would be possible to consider the cost of building an island as the equivalent to buying ground in a city, however within the floating kingdom, the agreement is for each island developed, a second island of similar specification is developed and given to the state. The formula is therefore slightly different.
For development to occur and a property market to develop, prices need to be stable and generally will move upwards.
Within the floating kingdom, the build cost is approximately twice the cost of building on free ground, if it could be found anywhere. Property therefore once built has a value. As time goes by cost of manpower and materials will increase, so although technology will improve and design costs may be less the overall price of construction will rise in line with inflation.
The price of new units will depend partly on cost, but also on the supply and demand situation, and developers will tend to choose those types of development that will give them the best return so the model is reactive and self correcting, and the choice of what is built on or within islands over time varying depending on the ability to sell and the profit available.
Existing units will develop a premium once the number coming up for resale is lower than the demand, and this premium will continue to rise over time.
A second premium is also built in, in that property that is nearer to the center and therefore able to get to all facilities faster will be more sought after. Over time we would expect to see some redevelopment and upgrading to line up with the then developed demand and market.
As there is ultimately no practical limit to the size of the floating kingdom, there should never be a limit to the availability of starter units.
The islands that are given to the state will not be sold, but will be used to provide facilities and to provide homes and holiday apartments, shops, hotels, factories etc for rental. The income from these rentals provide major funding in place of direct taxation, and allow the island kingdom to grow. These rentals will be handled and managed and maintenance organized by commercial estate agents, and be a normal part of the economy, comparable with units developed for rental.
From a lenders perspective there is no difference between land based property and island based, both have a secure intrinsic value that can be used as security, and both will over time increase in value.
A developer has the luxurious situation of minimal red tape and no shortage of ground, is not required to purchase ground before deciding or getting agreement as to how the property can be developed and can tailor the development to suit his needs. With different strands within the developing spiral plus the wall units and islands near to the walls, he has a considerable choice of site, although there are some limitations to the type of site and height at different places within the kingdom.
From a financial perspective, particularly early on the value of units will increase even while it is being developed making early commitments by clients likely and extra profits available by holding back some units until completion, or by renting some for a period before sale. Investors should be able to be shown the potential and security of the development, and therefore funding should be available for any competent developer.
Sub assembly and island builders
Sub assemblies can be made on land and shipped or towed out, but we also expect to see fairly early on developers who spot the opportunity to develop specialist island manufacturing capacity and to construct islands that can be moved around and produce either box sub assemblies or sections of pneumatic platform on a production line, developing the land for others to build on up from. Other sub contractors will also develop with specialties to make the most of markets available. Overall the effect will be to keep building costs down, allowing prices to be kept reasonable for people entering the property market within the kingdom, while also allowing everyone involved in the construction process a better margin than in land based developments.
Estate development or Consortium projects
Clearly there is also a great deal of scope for joint projects where a developer may for example be interested in developing a shopping center, and bring in another group interested in offices, homes etc as a part of the project. There are two ways we can see this happening firstly as a simple joint project between several parties and secondly as a managed estate development, where the estate managers put together the parties, pricing, contractors etc create islands involving many partners. This allows large developments to occur that could not be set up by a single development company or with known partners, while allowing all participants to become part of the development as opposed to clients, or tenants. On the home front this could also be considered the equivalent to a managed self build group, where all the actual development work is contracted out. This is where we would see many of the people with visions but no construction or development history being able to make considerable profits. As a guide we would suggest 15 to 20% of units should be considered appropriate profit for the managers. Alternatively look at being a manager and employing a consultant to run this for you if you are not able to do it yourself.
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