How Does Earthquake Risk Affect Real Estate Value? What Criteria Are Considered in Valuation?

Among the factors determining real estate value in Turkey are location, building characteristics, zoning status, and market conditions, as well as data related to disaster risks. Particularly in regions with a high earthquake hazard, the characteristics of the area where a property is located, the technical and legal status of the structure, and existing information regarding risky buildings or damage are elements that can be considered in the valuation process.

However, it is not accurate to evaluate a property as "earthquake-resistant" or "risky" solely based on its age or the region it is located in. The identification of risky buildings under Law No. 6306 is a separate process carried out by authorized institutions and organizations within the framework of the technical principles specified in the relevant legislation.

The role of the real estate valuation expert is not to technically determine the earthquake performance of the building, but to analyze the official, legal, and technical data available at the time of valuation and assess their potential impacts on the property's value.

ARGE Gayrimenkul Değerleme evaluates the physical, legal, and environmental factors that may affect property values in conjunction with market data, ensuring that valuation results are based on objective and justifiable data.

Does Earthquake Risk Affect Real Estate Value?

The relationship between earthquake risk and real estate value cannot be explained through a single variable. The characteristics of the structure, its legal status, existing technical assessments, and buyer preferences in the market are also important, in addition to the earthquake hazard of the area where a property is located.

For example, market demand for different buildings in the same area may vary depending on factors such as the age of the buildings, construction characteristics, current condition, or whether they have been renovated. These differences can reflect on the market value of the property along with other value factors.

Therefore, in the valuation process, "earthquake risk" is not treated as a standard coefficient that creates a certain degree of value increase or loss on its own. The characteristics of the property and the current market conditions are evaluated holistically.

What Criteria Related to Earthquake Risk Are Considered in Real Estate Valuation?

In the real estate valuation study, it is necessary to distinguish between the duties and authority of the valuation expert and the technical risk analyses conducted within the scope of engineering when examining earthquake-related factors.

From a valuation perspective, existing information and market conditions that may affect the value of the property are assessed.

Age of the Building

The age of the building is one of the physical characteristics that can be considered in real estate valuation. However, a definitive conclusion about a building's earthquake safety cannot be reached solely by looking at its age.

The techniques, materials, and regulations applicable to buildings constructed in different periods may vary. Additionally, the maintenance status of the building over time and any interventions it has undergone may also be significant regarding its current condition.

Therefore, while the age of the building is a data point for valuation, it should not be considered as the sole indicator of earthquake performance.

Current Physical Condition of the Structure

Within the scope of the valuation study, the observable physical characteristics and current condition of the property can be examined. The maintenance status of the structure, its usage, and observable factors important for valuation can be assessed in the report.

However, the field inspection conducted by the valuation expert does not replace a seismic performance analysis or identification of risky buildings carried out according to engineering principles.

Identification of Risky Buildings and Official Records

The existence of an official identification of a risky building regarding the property can constitute an important legal and technical data point for valuation. The identification of risky buildings under Law No. 6306 can be carried out by the Ministry, relevant administration, or institutions and organizations licensed by the Ministry.

Processes related to buildings confirmed to be risky can affect the use of the property, the transformation process, and the decisions of the owners, so existing official records and documents may be taken into account in the valuation study. According to the Ministry's statements, for buildings identified as risky, it is recorded in the land registry that it is a "risky building."

Condition of Reinforcement and Renovation

Reinforcement or comprehensive renovation works carried out in a building can also be significant in assessing the current condition of the property. However, it should be noted that not every alteration implies structural reinforcement.

If a building identified as risky under Law No. 6306 is to be reinforced, it must be determined that reinforcement is technically feasible, a reinforcement project must be prepared, and the necessary licensing processes must be carried out.

Therefore, in the valuation process, official documents and projects related to reinforcement should be distinguished from renovations made solely for decorative or usage purposes.

Soil and Regional Characteristics

The characteristics of the region where the property is located are also important for valuation. However, the regional earthquake hazard and the risk status of a specific building are not the same concept.

Indeed, in the Ministry's criteria for identifying risky buildings, a "risky building" is defined as a structure at high risk of collapse or severe damage under the earthquake hazard at its geographical location, and the identification is expected to be made according to the established technical rules.

Therefore, it is not correct to draw direct conclusions about the safety of a specific structure solely based on the earthquake hazard of a region.

Is a Risky Building the Same as Earthquake Risk?

Although "earthquake risk," "earthquake hazard," and "risky building" are sometimes used interchangeably in everyday language, they do not carry the same meaning.

In particular, a risky building is a legal status dependent on a technical identification process under Law No. 6306 and relevant legislation. The principles published by the Ministry also clearly state that a building not identified as risky by these methods cannot automatically be concluded to be earthquake-resistant.

This distinction is also important from a real estate valuation perspective. While existing official identifications regarding the property must be accurately addressed in the valuation report, it is not expected for the valuation expert to make a decision about the building's earthquake safety by conducting an engineering assessment outside their area of expertise.

How Does Post-Earthquake Damage Affect Real Estate Valuation?

If there are official damage assessments regarding the property after an earthquake, this information can gain importance in the valuation process. The nature of the damage, the usability of the property, the current legal status, and the necessary interventions can be evaluated as factors that may affect the property's value.

It should also be noted that official damage assessment and the identification of risky buildings carried out under Law No. 6306 are different processes. The Ministry states that a building determined to be damaged under another regulation cannot be evaluated in the same status if it was not identified as a risky building under Law No. 6306 before its demolition.

Earthquake Risk Is Not Solely Determinative in Valuation

Earthquake-related factors are one of the important topics in decision-making processes regarding properties in the Turkish real estate market. However, the correct approach from a real estate valuation perspective is not to consider earthquake risk alone and with a standard rate of value loss.

Different factors such as location, building characteristics, legal status, existing official assessments, market demand, and the property's usage potential should be evaluated together. Technical assessments regarding earthquake safety must be conducted by authorized individuals and organizations within the relevant areas of expertise and legislation.

ARGE Gayrimenkul Değerleme aims to contribute to the support of decision-making processes regarding properties with objective and reliable data by holistically evaluating the physical, legal, and market-related factors that affect property values.