Gentrification and the real estate market


Gentrification is a popular word in the real estate market. It is also a sensitive topic that involves many different stakeholders and perspectives.

In large part, gentrification is a process of urban development in which a low-income neighborhood grows rapidly, usually through the influx of wealthier residents and businesses.

Many believe that gentrification is a positive process. This can potentially bring much needed investment to long neglected areas, encourage homeowners to improve housing, increase consumer purchasing power in local businesses and increase property values.

A recent example of suburban gentrification is Melbourne’s Footscray. In 2015, Footscray in Melbourne was ranked as Victoria’s 74th suburb. In 2020, the western suburbs had climbed to sixth position.

On the other hand, this same process can potentially prevent low-income families from moving into previously affordable suburbs.

In 2017, Ink Coffee, a coffeehouse chain in the United States, received significant backlash on social media for posting a sidewalk sign that read “happily gentrifying the neighborhood since 2014”.

Photos of the board have spread on social media, sparking outrage. Activists staged protests outside the store and many pledged to boycott the chain.

A local resident said gentrification is making it more difficult for her to operate her business due to overpriced rent in the area. And she was not alone.

The region’s steady economic growth has forced much of the artistic community out of its venues and, in many cases, its homes.

Gentrification could have both positive and negative effects on communities. This is why it is vital that communities and councils maintain an open dialogue to address the challenges and seize the opportunities that arise with the process.

For a real estate investor, gentrification takes on a whole new meaning. Investing in gentrified suburbs represents the opportunity for above-average returns in the short term and overall wealth in the long term.

Savvy real estate investors look for areas in the early stages of gentrification and buy while prices are still affordable.

Gentrification is easy to identify once it has happened, but predicting a suburb that is about to undergo gentrification takes a lot of skill and experience.

Finding the suburbs with the best potential for price growth is only part of the equation.

Finding the right investment property that matches your investment goals and needs is a whole other game.

It’s a methodical process backed by extensive research and rooted in a proven investment strategy.

Location matters a lot, but it’s not the only thing. Demographics, infrastructure, major household structures, employment, demographic forecasts, schools, budget, tenant attractiveness and rental yield are just a few of the other things an investor should consider taken into account when evaluating real estate options.

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