Property hotspots can see values grow strongly within a short period of time. Many buyers and investors dismiss so called up-and-coming areas believing that by the time you hear about them, prices have increased and you’re buying at the peak. But it can also be argued that people are not always that quick to make investment decisions. When they hear about a popular neighborhood, they may look into it but do nothing until they see evidence that others are already buying in the area.

Here are my 3 tips on how to find areas that are set to grow in value:

Look for areas about to gentrify
Older districts, especially with run down tong laus and 1970’s high rises were often ignored in the past. Now these neighborhoods are seeing homeowners and developers moving in and changing the streetscape. An increasing number of young, professional residents and tenants is a good indication that the area is about to gentrify. Look for signs of new developments or renovated apartments, as well as new cafes or retailers opening in the area.

Look at supply and demand
If there is no more capacity to build and demand keeps on growing, you can be assured that prices will rise. Look for areas where the rental yield is rising as this indicates that an area is popular among renters. When renters become homeowners, they also tend to buy in the same area they’re renting in. Landlords also like to buy investment properties in the areas they’re most familiar with and often hold portfolios in one neighborhood.

Look for infrastructure projects underway
This is a good indicator that the area is likely to see a spike in demand. An example is the MTR extension along Hong Kong island. Developments close to the new stations saw their values increase as potential buyers and tenants were attracted to the transport convenience. The new Centre Street escalator connecting Third Street and Bonham Road in Sai Ying Pun also led to a flurry of activity as restaurants and shops opened in the neighborhood.

Published on 30th June, 2014