Gentrification is the movement of affluent residents into an area and the changes that occur due to the influx of wealth. Most investors know that if they purchase a property right before a shift begins in a suburb, then they can capitalise greatly from the opportunity. The challenge is, knowing how to identify one before it happens.
The signs of gentrification usually include the construction of modern infrastructure, greater employment opportunities, population growth and government or businesses willing to spend sizeable money into the area, such as a shopping centre and/or local amenities being developed or updated. The areas can also be run-down with lower socio-economic housing where there is a ripple effect outwards from wealthy suburbs that cannot sustain the population growth for the area.
Keeping up-to-date on developments and local planning through the council or utilising online resources such as property information websites can assist in being able to identify if an area is changing. You can also research if incomes are increasing, unemployment is decreasing or the level of education among residents is improving.
While an area may seem undesirable now, the astute property investor will look a few years into the future.