In Real Estate what is the Principle of Surplus Productivity?

Answer 1

A principle relating to the net income remaining after all expenses necessary to the operation. This remaining net income is imputable to the land and tends to fix the value of the property. As a result, the land is valuable according to the surplus productivity imputed to it. In the operation of an income-producing property, three levels of return are necessary, while the fourth (the land) can command only the residual income with no fixed or necessary rate of return. Under general economic theory, the four levels are factors in production and must be satisfied in order of labour, coordination, capital and land. Surplus attributable to land largely determines its value.