How to spot a neighbourhood on the rise in South Africa

With property prices subdued after a long period of slow growth, banks eager to offer finance, and interest rates at historic lows, there has seldom been a better time to get a foot on the property ladder.

However, not all of us can afford the ‘bargains’ on offer in South Africa’s property hotspots.

Are there still opportunities available for those with a little less to spend?

According to David Jacobs, Gauteng regional manager for the Rawson Property Group, the answer to that question is yes. He said the key lies in finding a currently undervalued suburb that is about to explode into the next ‘place to be’.

Convenient location

There’s a reason “location, location, location” is the mantra of real estate agents worldwide. In today’s busy world, a shorter commute or easy access to amenities like schools, shops and restaurants can dramatically affect the appeal – and growth prospects – of a particular neighbourhood.

While properties close to well-established CBDs, school networks, and social hubs are likely to cost a pretty penny, Jacobs said satellite hubs are popping up all over the place where buyers can still find real bargains.

“The idea is to look for a place that may not have been convenient in the past, but thanks to new developments are suddenly more accessible or within much easier reach of desirable new amenities,” he said.

Improvements to public transport facilities

One of the more telling signs of a neighbourhood on the rise is improvements to its public transport facilities. Jacobs said new transport hubs, or the redevelopment of old ones, almost invariably breathes new life into a neighbourhood.

“A huge number of South Africans rely on public transport to get around,” he said. “That makes homes within easy reach of transport hubs – particularly those with clean, safe facilities – very attractive. Those same transport hubs also attract stores and other businesses whose staff may find it convenient to live in the area, driving up demand and property prices.”

New construction

A lot of new construction is another good indicator of a neighbourhood on the cusp of becoming a hotspot, said Jacobs.“Developers never begin a new project without doing due diligence to be sure there is enough demand and growth prospects in the area to justify construction,” he said.

“If one or more major developers are active in a neighbourhood, you can bet your bottom dollar that property prices there are on the rise.”

Redevelopment of old suburbs

It’s not just new construction that indicates good growth prospects in a neighbourhood. Jacobs said the redevelopment of older buildings is also a good sign.

“We tend to see this in older, more run-down areas close to CBDs which have suffered from a bit of urban decay, and are now being reinvented as vibrant, modern, mixed-use neighbourhoods,” he said.

“You’ll often find old factories or warehouses being turned into trendy apartments, offices and boutique shops. Hip restaurants, cafes, and bakeries also make their way into the neighbourhood.”

Other opportunities

Sometimes, bargains can be found in well-established areas. Jacobs said price pressure on larger properties has led to subdivision in heritage areas, giving buyers a chance to get into sought-after suburbs more affordably and still benefit from their excellent growth.

“Over 70% of our buyers at the moment are first-timers on the market,” he said, “but not all of them are looking for entry-level properties. Thankfully, if you know what to look out for, there are opportunities in every price range.”

Read: Lockdown and lower interest rates are changing South Africa’s property market

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How to spot a neighbourhood on the rise in South Africa