Investing in Real Estate Hotspots vs Established Performers

 It is no secret that many real estate investors suggest buying properties in hotspots to ensure long-term returns on investment. Yet, many first-time buyers chose to browse the listings available in established performers as these areas have proven to be a safe bet. However, investing in one of them could be more lucrative than the other. If you are also stuck in the property hotspots vs established performers debate, this guide is meant just for you.

When it comes to selecting a location for their next purchase, many investors and genuine buyers wonder if they should consider investing in property hotspots or stick with proven performers that have been successful over the past years. While identifying the former could be a little bit difficult, investing in the latter can give you some peace of mind given the capital growth of these areas. 

However, it is also pertinent to mention buying property in established performers is far more expensive, which means those on a tight budget may have to settle on a smaller house or apartment with few amenities. Apart from how much money you are willing to spend on the purchase, choosing between property hotspots vs established performers also depends largely on how long you would want to keep the real estate.

Since we are committed to helping you make the best decisions when it comes to buying or selling property in Pakistan, Zameen.com has put together a guide detailing the pros and cons of investing in either of the areas. 

INVESTING IN PROPERTY HOTSPOTS

Real estate hotspots are the newly developed neighbourhoods located in the vicinity of proven performers. However, their real estate prices are substantially lower than the average citywide prices. Although these localities may not draw the same level of attention as their sought-after counterparts, they have the potential to grow and become the next established performer in the coming years.

Please feel free to check out our guide on how to identify property hotspots for more information.

PROS OF INVESTING IN PROPERTY HOTSPOTS 

These are the most noteworthy advantages of investing in property hotspots in Pakistan.

Affordable Real Estate Prices

Since these neighbourhoods are in different stages of development, their real estate prices are also relatively lower. Hence, investing in property hotspots could help you get an apartment, house, or a plot at an affordable price compared to popular localities that are considered proven performers.

Potential for High Growth

One of the top reasons many investors lean towards emerging hotspots is their potential for high growth. Once the infrastructural work is complete, these areas could offer impressive returns on investment. Moreover, as the population grows and commercial districts begin to emerge in these localities, the property prices will increase manifold to keep up with the growing demand.

Diversification of Portfolio

Investing in property hotspots allows buyers to earn good returns, which in turn helps them expand their investment portfolio by buying more properties. Thus, if you are a real estate market entrant, identifying and investing in these areas should be at the top of your list of priorities. 

CONS OF INVESTING IN PROPERTY HOTSPOTS 

Let’s look at the biggest shortcomings of investing in real estate hotspots.

Short-Lived Growth Spurt

Sometimes, investing in a property hotspot could be akin to a gamble. There is always a possibility that the market may not pick up the way it was predicted. Moreover, the growth spurt observed in the initial years could be short-lived, which may result in your property losing more of its value. Hence, one should be careful about where they are investing and be mindful of when is the right time to sell in order to cut their losses. 

Possibility of Developmental Delays

If the infrastructure development is delayed, the area could lose its status as a real estate hotspot. It might also affect your future investment prospects, as you would have to be patient and wait a little longer to sell your property without incurring any loss.

INVESTING IN ESTABLISHED PERFORMERS

The terms ‘proven performers’ or ‘established performers’ are used for well-developed localities that have shown substantial growth over the past years and continue to be a popular choice among investors and buyers. These areas are generally densely populated, boast a sound infrastructure, and are equipped with all the amenities one could desire. 

PROS OF INVESTING IN ESTABLISHED PERFORMERS

These are the most prominent benefits of buying real estate in proven performer areas.

Steady Demand

These areas attract the attention of prospective homebuyers due to their sound infrastructure, availability of public transport, proximity to business centres, and modern amenity selection. The steady demand for homes and plots in these neighbourhoods makes them an ideal area for property investment.

Lower Risks

As an area gains popularity in the real estate market, its demand continues to increase. Since these localities don’t face oversupply, the competition here is fairly less for sellers. Thus, if you invest in an established performer, you would easily be able to make a profit while selling your property a few years down the road.

Ideal for Short-Term Investment

Buying property in proven performers is an ideal choice for those seeking impressive capital gains in the short term. Since people are always looking for properties in these areas, you won’t have much trouble selling them for a profit or renting it out to generate a second stream of income.

CONS OF INVESTING IN ESTABLISHED PERFORMERS

These are the drawbacks of investing in proven performers. 

Expensive Real Estate Prices

Due to high demand, the properties in these neighbourhoods can be quite expensive. For instance, the price of a 2-bedroom apartment in a well-established and highly sought-after area could be more than that of a 3-bedroom apartment in a newer building located in an emerging hotspot.

No Guarantee for Long-Term Growth

For long-term investors, these established performers do not guarantee long-term growth. You may risk stagnating your portfolio by investing in a property that witnesses an extremely sluggish growth in prices. Furthermore, holding on to a negative property for an extended period could affect your finances in the long run. 

INVESTING IN PROPERTY HOTSPOTS VS ESTABLISHED PERFORMERS: WHICH ONE IS BETTER?

Well, the good news is that you don’t have to choose between these two options. Ideally, you should set your sights on a property hotspot that lies within or close to a proven performer. This way, you would be able to benefit from the high demand for these proven performers without going over your budget.

In addition, investors are advised to keep an eye out for long-term growth markets. Once identified, they should consider buying into these markets when they start to enter their next surge of growth and become hotspots.

Meanwhile, if you are planning to buy property for the first time, here are a few guides that may help you make the best decisions.

• Townhouse — an Emerging Real Estate Trend in Pakistan
• Advantages and Disadvantages of Buying an Old House in Pakistan
• Pros and Cons of Buying a Newly Constructed House
• What to Look for in a House If You Want to Start a Family Within 5 Years?