Which type of depreciation involves physical factors such as wear and tear?

Physical Deterioration refers to the decrease in value of a property due to wear and tear over time, stemming from physical factors. This type of depreciation is typically associated with the building's structure and components, such as roofing, walls, plumbing, and electrical systems, which can suffer from age-related decline or damage due to use. When a property is used, its materials may degrade, leading to a reduction in its overall market value.

This degradation is generally observable and can be quantified, making it a crucial consideration in property valuation and investment analysis. Addressing physical deterioration often involves maintenance and repair efforts to extend the useful life of the property and mitigate depreciation. Understanding this concept is essential for real estate professionals, as it impacts marketing strategies and investment decisions.