Here's How You Can Identify A Potential Hotspot
Investing in an emerging hotspot is considered to be a viable idea given that the investment is low and the returns in the future are high. An investor can easily find affordable properties to invest which can be later sold at a better price based on the way the locality develops and populates.
But, these localities have their share of risks, too. Not every locality develops as expected. For instance, delay in completion of infrastructure projects; delayed residential projects by developers; or poor connectivity could impact the resale value of the property adversely. So, how does one identify a potential hotspot to invest in and get good returns in the future? MakaaniQ lists some tips for you:
Emerging hotspots are localities that are still developing, hence, are scantily populated. But, with time you would witness a rise in population here. More and more people moving into the locality is one of the key parameters to identify an emerging hotspot which indicates consumer's confidence in the locality.
Impactful infrastructure projects
A potential emerging hotspot will have planned or under-construction infrastructure project/s. These projects will boost connectivity, boast better civic amenities, witness commercial development and even create more job opportunities. Research well about such projects coming up in the locality of your interest and the timeline by which these will be ready. These projects are the growth drivers of such localities and promote demand for real estate.
Keeping a track of how the property prices have moved in the locality in the past two to three years. This can give you a fair idea of how things would move in the future. An uptick in price trend is a positive for a market, even though it is slow. A cumulative of the price movement and the infrastructure projects can help you make a rough estimate of how prices will be five years down the line.
Identify high-growth area around
Unable to pick the right emerging hotspot? Look for high-growth areas around instead. Areas near high-growth localities witness a rippling effect and hence, are a safe bet for investment at an affordable price. Identify high-growth areas that have witnessed a price variation of five per cent or more every year. Now move to suburbs in a radius of 10 kilometres from these areas to find affordable properties. While you invest in less expensive property, over a time period of five years or less, these localities will witness a rippling growth effect and hence, a rise in property price.
The supply and demand ratio
Know how the demand and supply ratio is in the locality. A locality with a possibility of more residential development is a plus as this would trigger the demand to grow and inturn, the price to grow as well. These areas witness a rising rental yield, a rising population and also, the demographics of people buying property here. If more and more people are renting, these will be the people that will turn into potential buyers looking for a property of their own in the same locality. On the other hand, the rising population especially the median age of 35 years, shows the potential that the locality has in terms of rising demand for residential properties.