It’s fair to say that if you hear any area will be the next property hotspot then, as a property investor, you’re already too late to cash in.
In this article we will focus on what factors identify an existing popular hotspot – wherever you happen to be in the world – and why you may want to look elsewhere for your next property purchase or investment.
The first thing you should do is get to know your intended area. Visit it many times and at various times of the day and week. Go at night to assess the levels of noise and go during rush hour to test commute times. Those are factors that can lead to a successful and quick sale.
When a new development opens judge how many people are visiting. Are people queuing prior to the opening? Is there some form of ballot for potential buyers? If the answer to these questions is ‘yes’ then this could suggest the location is already hot, and that as an investor you stand the chance of being burned.
Talk to as many agents as you can, and get as much information and intelligence as you can about how quickly properties are being transacted. If property is changing hands quickly, or is selling above initial asking prices, this could be an indication of a hot location – and one that is potentially overpriced.
Another sign of a developing hotspot is the physical number of new developments. You can judge this simply be looking at the skyline, and looking at the amount of construction going on. Once a market starts its move towards becoming hot, developers move in. When you see large levels of property development, especially without a clear reason such as new infrastructure projects, this should act as an alarm bell.
A substantial amount of new development in a small area has the potential to lead to oversupply, and then subsequent reductions in property prices. This effect could be limited to just a very small location or a much wider district.
Although Thailand isn’t the most transparent real estate market in the world, you can also gauge levels of new development by monitoring property news and developer websites. Most markets have buying and selling cycles – similar in shape to a roller coaster – and a professional real estate agent will be able to tell you where your chosen city or location is in relation to its position on the roller coaster. Some cities even have separate cycles in different locations – so if your number one location is at its peak try looking for one at the bottom of the cycle and with potential to grow.
Every investor should know that making an emotional decision could be costly. Do your due diligence and gather as much information as possible before you sign the sales agreement.
The secret, if there is just one, is that as a property investor you should only be looking at the black and white of the figures and not the colour of the bathroom suite in your chosen property.