Types of real estate and principles of its classification: note for investors

Your acquaintance with the real estate market should begin not with the selection of a property or even with the accumulation of a decent amount of money for a future transaction, but with an understanding of what the market is and what it consists of. It is not enough to have knowledge that all real estate is divided into commercial and residential. Even within these large-scale categories there are constituent units. We invite you, together with our experts, to understand what types of real estate can be found on the market and what categories they are classified into depending on certain analysis criteria.

Real estate objects are divided according to…

The ability to distinguish objects according to different parameters is important not only for professionals working in the real estate industry, but also for investors. Understanding the specifics of the market will help you more clearly formulate your goals, even if you initially appeal to agency, without having the slightest idea what exactly interests you.

...origin

Of course, most of the real estate that we come across on the market is man-made. Nature has not yet learned to linearly plant beds and stack stone blocks into geometrically correct shapes, so developers come to her aid. Depending on the method and for what purpose this or that object was created, they are all divided not only into those created by man or nature, but also into:

• land masses and plots (the difference between them lies in the size of the territory);
• building;
• complexes of administrative buildings;
• complexes of structures;
• individual premises or parts of a building;
• apartment buildings;
• single-family houses (intended for one owner - villas, cottages, mansions, etc.);
• summer cottages;
• entrances;
• floors;
• apartments;
• rooms

…ready for use

Primary and Secondary Real estate markets are already bringing some clarity to this section. Most often, an investor may come across an object that:

• is already completely ready and put into operation;
• still under construction;
• needs major repairs or complete reconstruction.

…degree of reproducibility in kind

The question is whether it is possible to return real estate to its original appearance after prolonged use. Thus, the reproducible form includes all kinds of structures that, even after complete destruction, can be rebuilt. The non-reproducible form includes land plots that are deposits of minerals - no matter how hard you try, you will not be able to replenish natural resources on your own.

...functional purpose

Depending on what you are going to do in your square meters or acres of land, they are divided into:

• private houses various formats located in the suburbs (dachas, cottages, villas, mansions and other objects along with the plots on which they are built);
• apartment in apartment buildings, as well as separate rooms that act as self-sufficient residential units;
• land plots, where further construction is planned;
• various the buildings;
• buildings that are commercial real estate and intended for activities offices;
• industrial premises;
• warehouse real estate;
• exploited natural complexes that are used for agricultural activities, mining and other things;
• other objects.

…nature of use

When buying or building, an investor or developer puts a certain meaning into it, which they strive to convey through shape, size and other characteristics. The purpose for which real estate appears on the market determines the future nature of its use:

• housing;
• commerce;
• Agriculture;
• special needs (this includes various institutions, ranging from educational institutions to churches).

…ownership purposes

We have already mentioned goals in passing in the previous section, so it is worth considering this classification in more detail. Land and buildings can be acquired for the purpose of personal residence, business or agricultural activities, for the extraction of minerals and other resources. Also, any type of real estate can be considered as an investment.

...functional feature

In this gradation, all types of real estate already considered are divided into two main groups - residential и non-residential. If there is no need to further understand the first category, then non-residential or commercial properties require more attention. These include real estate:

• office;
• trading;
• hotel;
• recreational;
• industrial;
• warehouse;
• institutional;
• mixed type.

…degrees of specialization

This classification system divides all real estate into:

• non-specialized;
• specialized.

The first category includes those familiar objects for which the average investor goes to the open market. Commercial and residential real estate is purchased, sold, leased and is a valuable asset. Operations with it occur daily and, as a rule, do not require additional permissions or time.

As for specialized real estate, it is much less common on the open market due to its specificity and narrow focus. Its atypical nature is also influenced by location, specialization of activity, size of the object and features of its design. The most common forms include:

• museums and others cultural institutions;
• oil refineries and chemical plants;
• other.

Also, operating businesses offered for sale are often classified as specialized real estate. Previously, we told you about how you can choose a place to open a coffee shop, but there are also plenty of offers for the sale of already opened businesses that have proven their competitiveness over years of successful activity and an impressive client base.

Land, residential and non-residential premises

The Ukrainian real estate market, based on all the criteria considered, is divided into 3 simpler types that are understandable to every investor: land, residential and commercial premises.

Fertile soil attracts not only gardening enthusiasts and avid summer residents. Purchaseland allotment can be performed for one of the global purposes:

• for further development and similar works;
• for farming;
• for operation.

All objects residential real estate are divided into:

• primary and secondary market - brand new houses and apartments or those that have already been a family home for the previous owners;
• urban housing stock and the suburban housing market.

Looking ahead, it is worth mentioning the division into classes, such as economy, comfort, elite and business. We will certainly look at them in more detail. We'll be covering the topic of real estate classes in the first days of April, so don't forget to stay tuned to THE Capital's blog page to be among the first to know about the generally accepted grading.

If residential real estate can be purchased both for one’s own needs and for profit, commercial real estate there is only one goal - to help your owner or tenant recoup the funds spent as soon as possible and significantly increase them. You can do this by choosing one of its investment types:

• premises for trade and services;
• offices;
• warehouses;
• industrial buildings.

Modern trends penetrate not only the catwalks of fashion houses, but also set trends in the real estate market. Therefore, the offices and shopping pavilions that are familiar to us can now acquire completely unexpected interpretations.

Summarizing and studying the laws

Only by understanding the specifics of a country’s legislation can one confidently begin investing in its real estate. The domestic market cannot do without studying the following documents:

• Civil code Ukraine;
• Law of Ukraine “On State registration of real rights to real estate and their encumbrances”;
• Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding the Protection of Property Rights and Other Property Rights” rights to real estate owned by children and wards”;
• Law of Ukraine “On financial and credit mechanisms and property management during housing construction and real estate transactions”;
• The Law of Ukraine "About the notary";
• The Law of Ukraine "About mortgage";
• Order providing information from the State Register rights to real estate.

You are incredibly lucky that our experts thoroughly know the legal and legal aspects of real estate transactions, so there is no need to study thousands of pages of text on your own. The same applies to our colleagues in Warsaw и Dubai – a team of experienced specialists will guide you to real estate without risks or additional effort on your part.

Finally, we decided to summarize all the knowledge you have gained in simple tables dedicated to off-market and market properties. Having a clear structure before your eyes, you will be able to decide on your goals and understand which investments in which direction will be the most correct decision for you.