How to identify an ‘up and coming area’
As real estate agents we are regularly being asked by clients “where are the up-and-coming towns” in a certain region. Their objective is that they would like to purchase a property knowing that there is a strong likelihood that prices will increase as the town becomes more desirable. The gentrification of many parts of inner cities led the way in the 1980s and 1990s, with certain areas seeing prices triple in just a few years. This phenomenon has reduced significantly recently due to people moving out of the city centres after Covid lockdown and choosing to live in rural or costal location.
What drives an area to become ‘up and coming’?
To be ‘up and coming’ or desirable there needs to be a current or near-future significant demand to own a home in the area. There is usually a catalyst that drives demand in an area, this can be from various stimulus but ultimately any one of them can increase demand in property. When this also coincides with a lack of supply then of course the basics of economics ‘supply and demand’ drives up prices. Some of the common drivers for demand are as follows: –
- New infrastructure projects such a new airport, motorway, train station, etc
- Inward investment from large companies building a new factory or opening new corporate offices
- New Golf courses, Marinas, Shopping centres and other leisure facilities
- Celebrity neighbours who become synonymous with the town, think Rick Stein in Padstow Cornwall
- When a location is undervalued against its neighbours who may themselves have already gone through a price hike in recent years
- A lack of land to build new properties, this will push the supply / demand balance
Signs of growth and investment
There has always been an assumption that significant building works and cranes visible on the skyline mean that an area is desirable, however here in Spain this has sometimes proved to be the opposite. Many areas have seen too much building and many newly developed areas are like ghost towns because the demand just isn’t there.
Obviously building activity can be a sign of demand but only if sustainable. Real interest in an area can be identified where existing properties are being renovated or old houses are being flattened to build new properties. As there becomes less greenfield land to build on, the price of existing brownfield sites will increase significantly, it then becomes viable to buy a property solely for the land it sits on rather than the house itself.
If the area has very few empty shops and offices and has a vibrant night-time culture, then you can safely assume that if the area isn’t already much sought-after then it soon will be. If in a tourist area the holiday accommodation occupancy rates are also a great sign of the desirability of the area, albeit from people that wish to visit not necessarily live there permanently.
Where in Spain is the best place to buy right now?
The Costa Blanca North has been a desirable area for a long time now however the town of Denia has seen a significant increase in prices in recent years. Denia has always had some great assets that makes it a desirable place to live or own a holiday home, such as 12km of beach, the Montgo Natural Park, a Medieval Castle, many Fiestas, etc. However, as a working town it was never as desirable as some of its smaller and arguably prettier neighbours.
The catalyst in Denia seems to have come from it being designated as a UNESCO City of Gastronomy in 2015, this has put the area on the map globally. Alongside this, Denia is the home of one of Spain’s best-known chefs and his 3-star Michelin restaurant – Quique Dacosta, this is one of only eleven 3-start restaurants in the entire country. There are 4 other restaurants in Denia that feature within the prestigious Michelin guide.
To emphasis this focus of being a world leader for culinary creativity, two years ago the Street Food district of Els Magazinos was opened in Denia. This offers a vibrant bohemian environment to sample some of the region’s best foods. Also, every other year the city holds a festival of food where all the great restaurants and their chefs present their skills to the thousands of visitors that come to taste their delights.
The demand in the city is also being driven by the fact that there is very little building land remaining in Denia because it is bordered on 2 sides by the Montgo Natural Park, the Mediterranean Sea on another and rural land to the other. It has been noticed that many old 1970s villas are being flattened and, in their place, modern houses are being built worth many times more than the original house and land.
There is always somewhere on the up, look out for the signs of investment above and there will be opportunities to be had. Usually, by the time the area is known as ‘up and coming’ most of the bargains would have been had but it will probably be a great place to buy because it will be a nice place to live and visit and no doubt desirable. Remember, if an area is cheap, it is cheap for a reason!