The principle of anticipation in real estate refers to what?

The principle of anticipation in real estate is primarily concerned with the concept that the value of a property is influenced by the expected future benefits that ownership will provide. This principle suggests that investors and buyers take into account the future potential of a property when determining its current value.

In this context, the future value increase due to changes in land use is a direct manifestation of the principle of anticipation. For example, if an area is expected to be rezoned for commercial use, buyers may anticipate that the current residential property values will rise significantly due to this change. This expectation influences their willingness to invest in those properties today, reflecting the belief that their investment will yield greater returns in the future.

While the other options touch on important aspects of real estate — such as immediate cash flow and current market demand — they do not encompass the broader concept of anticipated future changes and their impact on current property value. The essence of the principle lies in recognizing that future developments and economic trends can significantly affect property valuations today, which is why the anticipation of future value increases linked to land use changes is the correct interpretation of this principle.