A key part of property investment is choosing the right location in which to make your purchase. Investing in an up-and-coming area is what every investor wants, and whilst no one can predict the future, doing your research on which areas are set to undergo big capital growth can pay off big time. Here are 5 ways in which you can spot the latest property regeneration area and make a killer investment to make you thousands.
Big businesses and start ups
Big companies and business start-ups do their due diligence when deciding to relocate or station their business. They will not place their business and hundreds of their employees in an unattractive area. They consider:
- The population of the area
- Employment rates
- Transport links
- Demand vs supply
An area that has lots of business start-ups and big business relocations likely has strong property fundamentals. For example, Birmingham has recently had HSBC and Deutsche Bank relocate into its city centre, meaning that it fulfils all of the criteria above. This means that there will likely be a big demand for property there which is set to increase in price further down the line. Pay attention to who is relocating where- watching business moves can be a good way to spot emerging hotspot areas.
Many first time buyers are cautious of investing in a regeneration area because they assume the area must be run-down and undesirable. They would prefer to put their money in an established area which has little to no works being done there. Doing this would come at the cost of major capital growth which is a key aspect for any investor. Government led projects, councils and private firms put millions of pounds into certain locations and they would not do so only to see it deteriorate. A general rule of thumb is that if you see tons of infrastructures and construction works, improvements to transport links and high end properties being built, chances are there is set to be big increases to house prices there in the future. Keep an eye out for these types of areas as this is where demand is highest.
University towns with a young population
Age demographic plays a big part in determining a locations growth prospects. Young graduates in their early twenties are often priced out of established neighbourhoods and therefore rent in up-and-coming areas. This plays a major part in a town’s resurgence as more and more amenities are built here to accommodate the young population i.e. bars, restaurants, gyms etc. This all plays a role in capital growth, for example Manchester has over 85,000 students and it’s no coincidence that the cities property prices are set to rise 18.1% until 2021 according to JLL. The influx of young people can change a town into an urban, trendy location that people want to live. Look out for these types of location and you are sure to experience capital growth on your prospective purchase.
Good transport links is one of the biggest factors in drawing in buyers and renters. In particular, property within walking distance of a major train station for example is perfectly placed to experience big levels of growth. Do your research and see which areas have plans to enhance their transport links. The Crossrail has had a major effect in towns in and around London, and HS2 is set to have a similar effect on cities like Birmingham and Manchester. In order to reap the rewards of buying into schemes near all this, you will need to do so before they are even complete. Buying into them post completion will only mean you pay a premium and miss out on all the capital growth you would have experienced had you bought a year or two prior. Act with haste and pick your spot well.
Some areas become desirable to invest in because of their association with nearby towns and cities. For example, towns like Paisley near Glasgow, Walsall near Birmingham and Bootle near Liverpool have all seen resurgence in buyer popularity recently because of the major regeneration works that have gone into the cities. People want to buy property that enables easy access into these major cities without paying city centre prices, and investing in these neighbouring towns and others provides that. If you see a major city undergoing huge works, take a look at the smaller towns nearby and see if you can identify the next regeneration hotspot because of its proximity to a major city. Regeneration from these major cities tends to trickle into its surrounding areas so you can benefit all the same by buying in some of these towns.
It’s worth remembering that identifying the next property hotspot can be speculative and is no way a guarantee. However, by following these steps and doing your own due diligence you stand a much better chance of buying a property destined to increase in price. Many of the property hotspots of yesteryear have all following the trends I’ve listed and by following these in today’s markets, you can tip the scales in your favour and buy a property that delivers long-term rental returns and capital growth alike.