What do 'air rights' refer to in real estate?

Air rights in real estate refer to the space above a tract of land, particularly the legal ability to use or develop this space. These rights are often defined by zoning laws or municipal regulations, which establish how high buildings can be constructed. Air rights can be valuable, especially in urban areas where building upwards can maximize property use and increase profitability. Owners of air rights may sell or lease them to developers for constructing taller buildings, thereby benefiting from their property’s vertical potential.

The concept does not encompass mineral rights, which refer to the resources beneath the surface of the land, nor does it pertain to utilities or legal claims on adjacent parcels, which deal with different aspects of property ownership and land use. Understanding air rights is essential in real estate as they can significantly affect a property's value and development potential.