11/08/2023
Why are new developments important when selecting suitable investment areas?
Well, let me tell you:
▪️Most people think simple economics...
Supply ⬆️ with more houses in the area,
Demand ➡️ remaining the same,
One would expect house prices to fall ⬇️.
However, this is typically not the case.
An injection of brand new 2 / 3 / 4 / 5 bed properties will sell for higher price than existing stock in an area, raising the ceiling price of the area, and in turn raising the average house price.
▪️Higher demand for similar properties. There is usually high demand for new build properties, if a buyer is unsuccessful in the purchase of a new build, they often look to other similar properties in the area.
▪️Increased spend within the local economy. Depending on the development size, construction can often take several years which sometimes results in the developer maintaining stakeholder relationships by injecting cash into the local economy.
▪️An increased local population. This is often part of a larger council development plan which focuses on creating more jobs in an area, increasing the size of local economy which attracts further investment, making the area a more desirable place to work and live, increasing the demand for property, and therefore increasing house prices.
As you can see from the points above, you can understand why new developments can be a key decider when selecting suitable investment areas.
At Dag Investments we carry out due diligence in all of our investment areas considering many factors to ensure there is strong capital growth potential and high rental demand for now and many years into the future.
(Photo is an ongoing development within Mayfield, Midlothian, which recently started construction)