How to estimate the price of a building plot?

What is a building plot?

In order to be constructible, a plot must meet several conditions:

• The plots of land must have planning permission. This means that the land must have been allocated as a development zone.
• The soil and subsoil of the land must bear the weight of construction.
• The land must be connected to essential networks such as water, gas, electricity, telephone, collective sanitation.

How to find out if you can put a house on land?

To value your property you can find out from your local authority and ask them for certain documents that clearly explain whether your land is suitable for building and what rules must be observed during construction.

The necessary documents:

• The Regional Development Plan: these are the reference documents for the development of the land and all its possible uses. They can be obtained online or from your local authority.
• Plan of the land register: it includes the property rights of property. It is a public register which can be obtained from the Federal Office for Land Registry Law.
• The cadastral map: : this determines, through cartography, the location of each property and the ground coverage, such as the roads, paths, buildings, walls, forests, vineyards, etc.... The cadastral map is part of the land register.

How to calculate the price of a building plot?

There are several ways of estimating a building plot. The valuation of the plot depends mainly on its size and the construction project.

The estimation of a building plot for the construction of a detached house

What surface should be used to calculate the price of a building plot?
The price of a plot is calculated primarily on the basis of the surface of the plot, but beware: there are several concepts of surface and not all cantons use the same indicators to set the price per m² of land.

The following are the different notions of surfaces you can encounter:

• Gross floor surface: this is the sum of all the floor surfaces used for living or working.
• The decisive building surface: This is the projection on a horizontal plane of the built volume, including the protruding parts of the building.
• Determining land surface: this is the land and parts of land within the building zone, such as access areas. Surfaces relating to the road network are not taken into account.
• Floor surface: the sum of the surfaces corresponding to accessible spaces that are closed on all sides.

It is important to understand that even if a plot of land is considered to be constructible, not all of it can be used. That is to say, a plot of 1,000 m² may only be 70% or even less constructible. This is due to natural constraints and to the urban planning rules to be respected, for example, a watercourse that runs under the land limits the building surface.

The cantons use different indices or coefficients to determine the building surface:

• Index of land usability (ILU): is the ratio between the gross floor surface and the building surface of the land.
• Index of land occupation (ILO): is the ratio of the decisive building surface to the determining land surface.
• Coefficient of occupation of the land (COS): is the ratio between the built surface and the surface of all or part of the plot included in the building zone.
• Coefficient of usability of the land (CUS): is the numerical ratio between the gross floor surface of the useful floor and the constructible surface of the land.

This information can be obtained from your local authority, which will tell you which index or coefficient to use and what is the constructible surface of your plot.

Calculation of the price per m² of a building plot:

Let's take the example of the COS, if the COS of your land is 0.3 (Information obtained from your municipality in the Regional development plan). The calculation will be as follows:

Total surface x COS = Floor surface
1'000 m² x 0.3 = 300 m².

Floor surface x Price per m² of your commune = Price of your land
300 m² x CHF 700.- = CHF 210'000.-

You can find the lands prices per m² published by your canton or commune.

Estimation of a building plot for the construction of collective dwellings

If your plot is large enough to accommodate several dwellings, you can contact a property developer to have your land appraised and if interested they might even make you an offer.The developer's calculation will be made using the residual method. The objective will be to estimate how much can be earned from the sale of the land after it has been developed. The developer must therefore deduct investment costs such as the price of the land, construction and marketing costs from the potential return value.

Calculation of the price per m² of a building plot by a real estate professional:

For this calculation, we will take the ILU, which is generally used for new constructions.

Yield value:
For a plot of land of 1'000 m², with an ILU of 0.8:
1'000 x 0.8 = 800 m² of building surface
One can build on 800 m²; 4 villas of 200 m².

Number of villas x selling price = Yield value
4 x 1'000'000 = CHF 4'000'000.


Investment costs:

• Land development: 800 m² x CHF 90 per m² = CHF 72,000 per m².
• Construction costs: CHF 1,000,000
• Marketing (prospection, advertising, administrative procedures): CHF 1,000,000
• Other costs (depending on the condition of the land: soil surveys, soil remediation): CHF 300'000

Construction costs - Yield value
2’300’00 - 4’000’000 = CHF 1’700’000

The maximum price of land that will be accepted is CHF 700'000, to obtain a minimum profit of CHF 1 million.

NB: The investment costs and profit here are approximate, this calculation was made to understand how to estimate the price of a building plot.  

To find out more about the valuation of a plot of land, you can find out what factors affect the price per m² of land here.