The 6 types of real estate
Real estate falls in the super asset class know as capital asset, as one can value it based on the income it generates. There are lots of different forms of real estate, from empty land to very specialised manufacturing plants. Despite all these differences, one can group them into six different types of properties. This section we will discuss these different types and the properties that make up these groupings.
Table of Contents
- Residential Property
- Commercial Property
- Mixed Use Property
- Industrial Property
- Specialised Property
- Agricultural Property
1. Residential Property
Residential property is any property zoned or designed for use as a domestic establishment in which one or more persons usually sleep and prepare and serve meals. This includes any land or buildings, stairways, walkways, driveways, parking spaces, and fences associated with the dwelling.
1.1 Vacant Residential Land
This is land that has been explicitly zoned for residential development, excluding public areas such as parks and green zones normally found within a larger residentially zoned area. Since there are no buildings or other infrastructure on it, we classify it as vacant land.
This is what one normally thinks of as a typical suburban home. It is a freestanding, permanent building, on a single piece of land that is zoned as residential property. Secondly, the building is used as a home, where people sleep, prepare and consume meals, etc.
1.3 Cluster housing
Similar to dwellings discussed above, it differs because it tends to very high-density developments; it differs from sectional titles in that:
- Each dwelling is built on a separate sub-divisioned parcel of land
- Both the land and the dwelling are owned by the same person
- The owner has a separate title deed for the property
1.4 Sectional title
These are also high-density housing developments, with the development divided into sections. Different sections can have different owners. Think of a flat complex with each flat being a section. The owner of a flat (section) has exclusive rights to the unit. Whereas other areas have common rights, such as passages, elevators, staircases, laundry rooms, gym area and are effectively jointly owned by all the sectional title holders. Importantly the land is jointly owned by all the sectional title owners.
1.5 Share block
These are entities that own or lease a property and sell shares to people that then gain the right to occupy a certain part of the property. The owner of the shares does not become owner of the portion of the property, they merely have the right to occupy it.
1.6 Time share
This is like a share block arrangement, where several people have the right to occupy a certain portion of a property for a set number of weeks a year. This is typically the case for holiday apartments. The owners of the time share do not own the property.
2. Commercial Property
Commercial property is zoned as commercial and is suitable for trading, retail, or service businesses. Your typical business premises.
2.1 Vacant Commercial Land
This is land that has been explicitly zoned for commercial development. Since there are no buildings or other infrastructure on it, we classify it as vacant land.
2.2 Commercial buildings and developments
Commercial buildings are improvements on land that is zoned for commercial use, for example:
- Business Property
- Office Space
- Retail Space
- Parking Facilities
- Shopping centres
3. Mixed Use Property
Mixed-use commercial property is a building or a land development that is a combination of both residential and commercial property. Think of a building that has retail shops on the ground floor and apartments on the top floors. This is a mixed-use residential or mixed-use commercial space.
4. Industrial Property
Industrial property is defined as property that is zoned for industrial use, such as warehousing, manufacturing and factories. One also needs to beware that it might be further broken down in to light and heavy industrial areas.
4.1 Vacant Industrial land
This is land that has been explicitly zoned for industrial development. Since there are no buildings or other infrastructure on it, we classify it as vacant land.
4.2 Industrial buildings and developments
Industrial buildings are improvements on land that are zoned for industrial development, for example:
- Scrap Yards
- Data Centres
4.3 Industrial parks
Industrial parks are clusters of industrial land and buildings that are adjutant to each other, zoned for commercial or industrial use and often fenced with security-controlled access points.
5. Specialised Property
These are properties that are designed for a specific purpose and are difficult or expensive to convert to other purposes. Example would be:
- Cold Storage
- Sports Stadium
6. Agricultural Property
These are tracks of land that are zoned for agriculture purposes. Examples of these are:
- Ranches/Castle Station