Every other day people migrate from rural areas to urban areas in search of greener pastures or move from one city to another in pursuit of a job, education or the beginning of a new life. Making an investment in a capital city to a lot of people is a much more attractive option compared to a rural area for many reasons that include a shorter time for a positive return on investment and there is always a demand. The last thing you have to worry about as an investor is a demand for your property in a metropolitan area. The market for urban properties is a large one with a lesser risk factor. But like every other investment, it has its advantages and disadvantages. So, if you are looking for a property investment idea, here are a couple of things to consider before making your investment in urban areas.
Urban areas are expensive to purchase, you will most likely spend double or even more purchasing properties in urban areas compared to a rural area. The price is due to competition, urban areas have an ever-growing competition and with people demanding a lot more from their house, converting them into smart houses has made it all the more expensive. There is also a growing rate of highly paid millennials that are willing to pay just about anything to live in these metropolitan areas, their demand for this has led to a spike in rent prices. Bear in mind that you will be spending money on insurance, council rates, body corporate levy, maintenance, and rental managers.
Developing property in urban areas is a lot more rigid and strict because it is governed by state laws. The laws are really strict and they must also be followed strictly and people from the housing department will most likely visit frequently to ensure you comply, and there is also the bureaucracy with getting approvals to develop your property. Also, bear in mind that the amount you spend on tax in urban areas is a lot more than you would spend in the rural area.
Demand is a lot higher in the cities, almost exceeding the supply. Appreciation rate is a lot faster in the city, this is why people buy properties that might seem like a bad investment but eventually, it appreciates and they make back their money and become equally comfortable.
The fact that cities have the most amount of access to a lot of infrastructural facilities –hospitals, electricity, schools, jobs, etc. makes them a great catch for living in. also, while developing you have access to a larger variety of workmen or labour men who play different roles in property development. Also, the fact that there is a large array of them means that their services would not be as expensive compared to rural areas where they are scarce or you have to transport them all the way from the urban area.
Because of how high in demand these properties are, there will be a need to constantly maintain the place so you are able to take on new occupants when you have to. You would not want to ignore this as ignoring it will lead to you spending a lot more and losing as well because you will have to carry out said renovations when the building is empty.
At the end of the day, your decision boils down to your market. You need to do your due diligence, understand your market very well before making any decisions. Also, a key determinant is how much a bank will lend you, be sure of how much they will be willing to lend you before making any commitments