Turn a profit on property investment with gentrification

The word gentrification is like a lottery win to people who own property in an area that is becoming gentrified. This term describes a locale that is being improved, typically to meet the needs of the middle class. The process of gentrification sees improvements in various ways to satisfy this tier of society, and consequently increases popularity for an area.

Asia has a fast-growing middle class. Many people strive to reach this status since the middle class have a disposable income. Their money is spent on services and commodities that could be deemed a luxury rather than a necessity. The increasing number of people falling into the middle class bracket can be reflected on the streets such as with the opening of new shops, restaurants, and entertainment options. Even the number of cars on the road suggest the wealth of the population.

Gentrification occurs as a place becomes more in demand. Initially people move to an area thanks to the cheaper property prices on offer whether that it is owning or renting. These people map out the area in the first instance and usually come from creative or freelance backgrounds where wages are lower so there is a need for more affordable housing. Overtime their friends follow suit. Small businesses start emerging to cater for this growing population who have extra cash to spend. It takes just one hipster coffee shop to suggest what direction the neighbourhood is heading in. More businesses follow, and a snowball effect occurs with more and more business opening shop to cash in on these spenders.

In turn, other people eye up in the area in response to these increasing services. Generally those that arrive later aren’t brave enough to join in the first wave since they appreciate living in an area that is already well established and has their luxury services in place. For property investors, buying in an area that is being earmarked for gentrification is a lucrative way to generate a profit. >>>Property Mortgages Calculator

As demand in gentrified area steps up, property prices increase too since demand outstrips supply. The area has been transformed thanks to this increased investment. Even the infrastructure and roads will benefit too, the area looks more polished. For some investors this is the time to sell up and then reinvest in the next upcoming area.