Every property goes through good and bad cycles. Best you understand where yours is at, before you jump in.
Ever thought about the fact that properties have life cycles? In fact, suburbs and cities have life cycles too. Think about suburbs that have ‘gone down’, ‘gone crazy’ or become hip and trendy. Ever wondered why?
There are four main stages in the life cycle of property:
1. Growth: A new suburb or township is established; new town planning policies are implemented; demand peaks and supply is met.
2. Stability: The ‘dust’ of the growth phase settles down; supply and demand exist in a happy balance; relatively few properties change hands.
3. Decline: The ‘broken windows’ theory sets in – as one or two properties deteriorate, this escalates the decline of those around it.
4. Renewal: Revival of the area sparks refurbishments – usually through some kind of Urban Management system.
Let’s do a case study on Braamfontein and the CBD: one of the original Johannesburg farms, whose history can be traced back to 1853...
Early in the suburb’s history, the farm was subdivided, meeting demands of the growth of a city in the midst of a gold rush. During Apartheid, large-scale commercial development was encouraged. Growth.
Post WW II Johannesburg thrived and its economy matured off the back of early infrastructure development. Stability.
In the early 1990s, the suburb saw mass migration from former township dwellers and illegal immigrants, causing an exponential rise in crime. Most businesses packed up and moved north to form the Sandton CBD, leaving the suburb a ‘ghost town’ of decay and hijacked buildings. Property prices plummeted and property owners abandoned ship. Decline.
A public/private partnership saw the formation of the “Braamfontein Management District” and a process of urban renewal. The suburb is well on its way to establishing a new character: that of a young and trendy educational, art and entertainment hub. Renewal.
Bottom line? Understanding where a suburb is in its ‘life’, will help you jump in (or out) at the right time. And as we know… it’s timing, timing, timing!
Email me for a list of suburbs offering you the best investment timing right now.
Further reading: some interesting facts about some of Johannesburg's historic suburbs.