Here's How You Can Identify A Potential Hotspot

Investing in an emerging hotspot is considered to be a smart move as it the investment here is low and the returns in the future are high. 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 have an adverse impact on the resale value of the property.

So, how does one identify a potential hotspot to invest in that promises good returns in the future? MakaaniQ lists some tips for you:

Growing population

Emerging hotspots are localities that are still developing, and 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.

Infrastructure projects

A potential emerging hotspot will have planned or under-construction infrastructure project/s. These projects will boost connectivity and civic amenities, witness commercial development and 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.

Price movement

Keep 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.

High-growth area

Look for high-growth areas that have witnessed a price variation of five per cent or more every year in a city. 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, resulting in a rise in property prices.

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 could be a choice as this would trigger the demand and the property prices to grow. These areas witness a rising rental yield, a rising population and rising number 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.

Also Read: Emerging Hotspots Or Established Performers: Where Should You Invest?