5 ad­di­tional clues when choos­ing the right lo­ca­tion

Oman Daily Observer - - FRONT PAGE -

n last week’s col­umn I have shared what could some of the most im­por­tant clues be when a dis­trict or a city is go­ing to de­velop quickly, bring­ing value to a prop­erty in­vest­ment. Af­ter re­ceiv­ing many e-mails from the read­ers, I have de­cided to add 5 more fac­tors that can drive pop­u­la­tion or value to a prop­erty. Com­bined to­gether they build a list of 10 that every prop­erty in­vestor should keep in mind be­fore buy­ing.

In the pre­vi­ous col­umn de­scribed the fol­low­ing fac­tors: 1. Big in­vestors 2. Ed­u­ca­tion 3. Cau­casian nights 4. Pub­lic trans­port 5. Govern­ment of­fices In this col­umn I want to add the fol­low­ing: 1. Banks and in­sur­ance 2. Po­lice 3. Hos­pi­tals 4. Ho­tels 5. Fam­ily restau­rants Let us an­a­lyse them in­di­vid­u­ally: I have 1. BANKS AND IN­SUR­ANCE Fi­nance in gen­eral is pop­u­la­tion driven. One of the largest spend­ing for banks and in­sur­ances, is the out­reach. Banks, to start with, for the sur­vival of their business model, must of­fer bank branches and ATMs in areas that are about to grow in pop­u­la­tion.

“Hot spots” can be taken once, hence large banks are likely to rent the most prom­i­nent cor­ners for their ATM lo­ca­tion as well as the most pre­mium spots for their cus­tomers to feel spe­cial.

Al­though this is a great in­di­ca­tor of in­vest­ment value for prop­er­ties, it is nec­es­sary to men­tion that some­times banks re­act to pop­u­la­tion growth while it is al­ready hap­pen­ing, not be­fore it takes place. Hence if you see prom­i­nent banks or in­sur­ance of­fices open­ing in a dis­trict that you are con­sid­er­ing for prop­erty in­vest­ment, be alert... You might be just too late. 2. PO­LICE Un­doubt­edly when a new Po­lice post is open, it is clear sign that an area is ex­pand­ing. If too many Po­lice posts open though, it may sim­ply mean that crime is grow­ing.

Hence a prop­erty in­vestor must be able to read be­tween lines. Is the Po­lice post open­ing to ful­fil pop­u­la­tion quota set by the govern­ment? Or is the dis­trict be­com­ing more dan­ger­ous? In both cases how­ever,

Po­lice of­fices and posts might be man­dated to be open only af­ter pop­u­la­tion or crime has al­ready in­creased. In other cases though, Po­lice posts are care­fully planned by the govern­ment on the blue­print of a de­vel­op­ing area. Hence it could be just in time, or too late for in­vest­ing there. 3. HOS­PI­TALS Open­ing an hos­pi­tal is not cheap. It re­quires mil­lions of dol­lars and of­ten in­volves the re­lo­ca­tion of the em­ployed spe­cial­ists. Large prop­erty play­ers who build hos­pi­tals for business re­turns, are usu­ally very care­ful in pick­ing the lo­ca­tion and tend to move years in ad­vance com­pared to small in­vestors. If you find a sce­nario where a hos­pi­tal opens when the pop­u­la­tion growth has not hap­pened yet, be mind­ful that the hos­pi­tal in­vestors might be 2 to 3 years early in se­cur­ing prime lo­ca­tion at low price.

Hence you can con­sider in­vest­ing there, but it would re­quire you to be able to hold your in­vest­ment for 2 to 3 years be­fore you may start rent­ing the prop­erty. If you do not have any mort­gage com­mit­ment, it could be a wise choice, but if the loan is im­pact­ing your cash flow, avoid over stretch­ing. 4. HO­TELS Tourism and hos­pi­tal­ity only sur­vive when there is enough in­ter­est in the gen­eral pub­lic to visit a spe­cific place. Land­marks such as theme parks, mu­se­ums and green parks are usu­ally main at­trac­tions that ho­tels would not miss for nearby in­vest­ment.

Ho­tels, sim­i­larly to hos­pi­tals, tend to move fast, so when you see large ho­tel chains com­ing up, make sure that you can hold your prop­erty in­vest­ment (i.e. mort­gage re­pay­ment years.

If on the other hand, small ho­tels are open­ing af­ter the big ones have es­tab­lished, it might be just too late for in­vest­ing, un­less you have pur­chased a prop­erty able to host a bou­tique ho­tel. if any) for 2 to 3 5. FAM­ILY RESTAU­RANTS There are many type of restau­rants, but only one re­ally in­di­cates that pop­u­la­tion growth is com­ing. Fol­low the pres­ence of fam­ily restau­rants in malls. Even if malls are still mostly empty, when fam­ily restau­rants start rent­ing, usu­ally other busi­nesses fol­low. As a chain re­ac­tion, more shops be­ing launched equals to more peo­ple work­ing in the area as well as more cus­tomers vis­it­ing the area and even­tu­ally more peo­ple want­ing to stay near the area. In some cir­cum­stances how­ever, fam­ily restau­rants open too early and are un­able to sus­tain the neg­a­tive cash flow. In those cases, fam­ily restau­rants will change own­er­ship or close down.

Do not get too ex­cited about generic fam­ily restau­rants... fol­low those that have achieved some suc­cess on global scale. They usu­ally have done thor­oughly due dili­gence be­fore in­vest­ing.

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