They say that timing is everything and it’s a principle that couldn’t be more true as far as property investment is concerned.
Buying property in a suburb that’s up-and-coming before it features as such in the minds of property developers and other investors is all about being able to recognise the tell-tale signs.
Bearing in mind that low and mid-value properties are performing better than high-end properties and the rising popularity of sectional title properties, here are some of the indicators you should be looking out for:
Large-scale infrastructure projects or developments
Be on the look out for any major development projects like office parks and shopping centres that are either underway or ones that are in the pipelines.
Large-scale infrastructure developments by nature help create jobs and in so doing, they are bound to attract new residents to the area and drive up the demand and value of properties in the area.
Schalk van der Merwe, a Rawson Property Group franchisee, says that previously run down or neglected suburbs undergoing gentrification is where you should be looking for your next investment because gentrification is a clear indicator of a suburb on the rise.
“Keep an eye out for suburbs that may have had a poor reputation in the past, but are now attracting an increasing number of young residents with decent incomes,” he says.
“New retailers, cafés and restaurants opening up are goods signs as is an increase in renovation or new construction in the area. Together, these factors breathe new life into tired suburbs and if the momentum is maintained, can turn them into trendy hotspots with excellent growth potential.”
High demand, low supply
As much as you should be looking for areas undergoing major development, van der Merwe suggests that you also take note of suburbs that have very little or no further capacity for development in high demand suburbs because the demand for property in those areas will always be higher than the supply.
While you may have to pay a hefty premium for the property, the rising demand will make your investment worthwhile from a rental perspective.
“Rising rental yields can be a good indicator of suburbs that are likely to see this balance changing in favour of investors as they indicate popular rental areas and renters typically buy in the same suburbs in which they rented,” he says.
If a suburb has gained popularity, the chances are that neighbouring suburbs will also begin to see an uptick as a ripple effect.
“If you miss the boat and the suburb you’re interested in has already outgrown your budget, consider a purchase in a neighbouring suburb. We often see something of a ripple effect with suburbs bordering a high-growth area, experiencing growth of their own thanks to the positive changes and increased popularity of the neighbourhood next door,” van der Merwe says.
These suburbs are often between 5% – 10% cheaper than the more popular neighbouring suburb and it’s one way you can get ahead of the curve.
“Pay close attention to suburbs with median prices more than 5% lower than their trendy neighbours. This is often a sign that they’ll be playing price catch-up in the near future,” he advises.