I was prompted to write this blog article bearing the above title because of some questions I received from one of my ardent followers and readers of my magazine articles in "This Is Zambia Magazine” - a Trade and Investment Magazine. The name of this follower and reader is Nawa from PICZ.
Nawa asked me the following questions:
1. “What's your view on the fastest growing trend of people building houses for rent over 25 kilometers away from the Central Business District Area such as Chilanga, 12 miles in Kabangwe Area along the Great North Road and the Waterfalls Area of Chongwe District?”
2. “Is the rental demand high in such places or areas?”
3. “Where is the new CBD (Central Business District) Area moving to? Is it in the Thabo Mbeki Road area or the Makeni Eureka Park area of Lusaka City? Development currently is not coordinated”.
I responded and answered these questions and thought of sharing my response with other people who might be having the same questions in their minds as well. And hence my writing of this very article so as to help other people or real estate investors interested in such information.
The above 3 questions can all be summed up in one question which is:
“What factors or indicators must I look for when choosing a real estate market or neighborhood to invest in, which can give me a good return on my investment property?”
Well, there are several local market / local neighborhood area economic indicators or factors you'll want to consider as a real estate investor before you seriously make up your mind to invest in a particular market or neighborhood. And these are as follows:
Nawa asked me the following questions:
1. “What's your view on the fastest growing trend of people building houses for rent over 25 kilometers away from the Central Business District Area such as Chilanga, 12 miles in Kabangwe Area along the Great North Road and the Waterfalls Area of Chongwe District?”
2. “Is the rental demand high in such places or areas?”
3. “Where is the new CBD (Central Business District) Area moving to? Is it in the Thabo Mbeki Road area or the Makeni Eureka Park area of Lusaka City? Development currently is not coordinated”.
I responded and answered these questions and thought of sharing my response with other people who might be having the same questions in their minds as well. And hence my writing of this very article so as to help other people or real estate investors interested in such information.
The above 3 questions can all be summed up in one question which is:
“What factors or indicators must I look for when choosing a real estate market or neighborhood to invest in, which can give me a good return on my investment property?”
Well, there are several local market / local neighborhood area economic indicators or factors you'll want to consider as a real estate investor before you seriously make up your mind to invest in a particular market or neighborhood. And these are as follows:
1. LOCAL AREA EMPLOYMENT TRENDS
EMPLOYMENT is one of the most important local area economic and investment indicators related to both the current and future health of a real estate market or neighborhood. Simply put, a local area neighborhood where people happen to have more jobs will equally result in those same employed people having disposable incomes that make it possible for them to afford to pay their monthly rental fees. And those that do not happen to have jobs, won't be able to afford to pay their monthly expense obligations, and may have to be forced to move elsewhere to look for employment which often involves moving to other areas where there are readily available employment opportunities. And therefore, the logical and business sense question to ask yourself as a real estate investor is, "Does the area I wish to invest in offer good employment trends both currently and/or in the immediate near future which make it feasible for me to go ahead or not go ahead and invest in this particular area?" If it does, then go ahead and invest. If it doesn't, then look somewhere else where employment trends seem promising and/or good.
2. NET MIGRATION TRENDS
Are more people and business entities moving into the market you are considering to invest in or are they moving out of it? Why ask yourself this pertinent question? Because this trend happens to have a major impact on the local real estate market due to the fact that the demand for housing or office spaces will either increase or decrease in proportion to the total population of a given market or neighborhood. Therefore, the greater the population of a given local market or neighborhood, the higher the demand for local housing and/or office spaces as well as other social amenities which end up helping to push property values and rental rates higher in the long run making it healthy for the rental business whether for residential purposes or for commercial purposes! Whereas, the smaller the population of a given market, the lower the demand for accommodation and other social and related amenities which thus leads to lower property values and/or lower rental rates for property owners in the long term as well.
So, make sure that the area you are considering to invest in has the potential of a population explosion now and in the near future for better rental income profits or cash-flow.
So, make sure that the area you are considering to invest in has the potential of a population explosion now and in the near future for better rental income profits or cash-flow.
3. INDUSTRY DIVERSIFICATION
A real estate market or neighborhood that happens to have a highly diversified range of industries or businesses offers less market volatility in harder economic times or recessions as it were than markets which are mainly driven by one or two industries. Why? Because such markets will tend to be affected the most than highly diversified real estate markets, and may have to take quite a long time to recover afterwards.
However, some investors may happen to do well in such narrow markets, but it's safer to mitigate one's single only or double only industry market risks by focusing on real estate markets with a broader industrial base that offer a diversified employment base rather than a one or two only industry market.
However, some investors may happen to do well in such narrow markets, but it's safer to mitigate one's single only or double only industry market risks by focusing on real estate markets with a broader industrial base that offer a diversified employment base rather than a one or two only industry market.
4. LOCAL AREA DEVELOPMENTAL ACTIVITIES OR PROJECTS
Local area developmental activities or projects both current and planned which are being presently carried out or are ear-marked to be done in the near future are also a very good local economic indicator of the potential of a local real estate market or neighborhood in terms of real property investment whether for residential or commercial purposes. Development activities or projects being done in a given market such as the construction of new tarmac roads, shopping malls, hotels, hospitals, football stadia, construction and expansion of new airport terminal infrastructure as is currently being undertaken in the eastern part of Lusaka City where unprecedented developmental projects are being carried out presently.
Other local area economic indicators falling under the umbrella of developmental activities include the coming up of multi facility economic zones which are more or less like diversified industrial hubs in certain selected parts of the entire country! These multi facility economic zones offer good prospects for a diversified employment base which will result in demand for housing and other social and related amenities in the long run in particular real estate markets.
In Lusaka Province for instance, we have two such economic zones that is to say, Lusaka South Multi Facility Economic Zone situated in the Lilayi -Chilanga areas and Lusaka East Multi Facility Economic Zone situated in the Chongwe area near Kenneth Kaunda International Airport respectively.
Therefore, what all this means is that as a shrewd real estate investor or potential real estate investor, you can use this knowledge of current and proposed developmental activities or projects to your advantage and start buying and/or investing in income generating rental properties as early as possible before everyone else wakes up from their slumber by moving in swiftly.
Other local area economic indicators falling under the umbrella of developmental activities include the coming up of multi facility economic zones which are more or less like diversified industrial hubs in certain selected parts of the entire country! These multi facility economic zones offer good prospects for a diversified employment base which will result in demand for housing and other social and related amenities in the long run in particular real estate markets.
In Lusaka Province for instance, we have two such economic zones that is to say, Lusaka South Multi Facility Economic Zone situated in the Lilayi -Chilanga areas and Lusaka East Multi Facility Economic Zone situated in the Chongwe area near Kenneth Kaunda International Airport respectively.
Therefore, what all this means is that as a shrewd real estate investor or potential real estate investor, you can use this knowledge of current and proposed developmental activities or projects to your advantage and start buying and/or investing in income generating rental properties as early as possible before everyone else wakes up from their slumber by moving in swiftly.
5. Market Inventory Trends
Market inventory is simply real estate investment language for “the number of rental / real estate investment properties available for rent in a particular market”. This statistic simply indicates how much supply is available in a particular market you are currently researching on or are currently considering to invest in. If the particular market you are interested in has enough and plenty stock available, then it does not make any business sense to invest in such a market unless you just want to lose your investment money. If on the other hand, the market doesn’t have enough stock available or the market happens to have sufficient potential in the immediate near future due to projected demand as a result of current and proposed developmental activities taking place or are likely to place, then such a market is worth considering even if currently there isn’t enough demand.
However, even if a particular market is currently saturated with plenty stock of rental properties available, there are always some investment opportunity gaps in the market which you can take advantage of if you happen to be a shrewd real estate investor. Other unexploited real property investment opportunities may include but are not limited to the following: schools, colleges, universities, boarding houses for students, private car parks, play parks for children, lodges, hotels, shopping centers, fuel filling stations, private hospitals, warehouses and last but not the least, property development such as converting bare and unused farmland into commercial or industrial use in order to take full advantage of unexploited real property investment opportunities in already developed and saturated markets lacking certain essential services for the local population. These can all be taken advantage of by you before anyone else does it!
You mustn’t therefore limit yourself in terms of real property investment. Learn to cast your investment net wide! Investment flexibility is the name of the game! Never be rigid in your investment efforts. Be open and be flexible to change and opportunities.
However, even if a particular market is currently saturated with plenty stock of rental properties available, there are always some investment opportunity gaps in the market which you can take advantage of if you happen to be a shrewd real estate investor. Other unexploited real property investment opportunities may include but are not limited to the following: schools, colleges, universities, boarding houses for students, private car parks, play parks for children, lodges, hotels, shopping centers, fuel filling stations, private hospitals, warehouses and last but not the least, property development such as converting bare and unused farmland into commercial or industrial use in order to take full advantage of unexploited real property investment opportunities in already developed and saturated markets lacking certain essential services for the local population. These can all be taken advantage of by you before anyone else does it!
You mustn’t therefore limit yourself in terms of real property investment. Learn to cast your investment net wide! Investment flexibility is the name of the game! Never be rigid in your investment efforts. Be open and be flexible to change and opportunities.
APPLICATION OF THE 5 KEY REAL ESTATE MARKET INDICATORS TO THE FACTS RAISED IN THE 3 QUESTIONS ASKED BY NAWA ABOVE
My view regarding question 1 asked by Nawa above is that it's okay for a real estate investor to build or invest in income generating real property situated 25 kilometres or more away from the CBD as long as such an area has a fair balance of five key real estate market indicators discussed above in the preceding paragraphs.
For instance, in Lusaka Province, areas like Waterfalls, Silverest, Vorna Valley, Meanwood Ndeke, Ranchdale, Palm Valley, Meanwood Ibex, Mwalubemba and/or Kasisi areas of Chongwe District to mention but a few areas, offer the potential for the best real estate investment opportunities due to the fact that there are a lot of developmental activities currently taking place in and around these areas that will result in demand for housing and other related social amenities in the long and short term. Developmental activities such as the completed two shopping malls namely Waterfalls and Garden City, construction of another new shopping mall as well as construction of a new specialized hospital along Airport Road, all entail a projected high number of employment opportunities to be created once these infrastructure developments are fully completed. With a high number of employed people comes a high demand for housing and other kindred services resulting in more money in rental property owner’s pockets!
The above mentioned list of selected areas or neighborhoods is not an exhaustive list of ideal real estate markets in the Republic of Zambia where one can invest in but has just been used for illustration purposes regarding how to choose a good real estate investment market.
Concerning question 2 above, about the rental demand, it all depends again on the above 5 key factors or indicators. The rental demand may not be high for now but it is likely to go up any time soon once all the developmental activities are completed. So, it is better to be prepared for an opportunity now than not to be prepared for such an opportunity when it presents itself! That has always been a rule of thumb when it comes to seizing investment opportunities! Period.
And finally, regarding question 3 above, about where the new CBD is moving to, the issue is not about where the new CBD is moving to. The real issue here again is about reading investment trends and local economic indicators. Where do you see potential investment opportunities coming up or are likely to come up? If you can answer this question, then you'll be way ahead of the lot when it comes to seizing investment opportunities!
So, developmental activities may seem uncoordinated but the secret of successful real estate investing lies in reading local economic and market trends. Period!
Therefore, prepare for opportunity by preparing yourself to spot opportunities when they present themselves. Never wait until it is too late. Remember also that when every Jim and Jack is talking about a certain investment opportunity openly and publicly, then it only means one thing - that the party is over!
So, learn and master the art of spotting investment opportunities before they go public.
CONCLUSION
In conclusion, the factors or indicators that will determine which market, area or neighborhood one may need to invest in will depend on employment levels, net migration of people and/or business entities, industry diversification, market inventory of current rental properties available and finally current and proposed developmental activities or projects taking place or likely to take place in the near future in a particular market or area you are currently considering to invest in.
If the market you wish to invest in happens to have a fair balance of these five real estate market investment indicators, then it makes business sense to invest in such a market. If not, then find another market where these investment fundamentals balance up. Otherwise you might find yourself running at a loss.
Many real estate investors often make the fatal mistake of buying and/or investing in investment real property with little to no consideration of the market, area or neighborhood the property is located in. This can be one of the deadliest mistakes an investor can commit because buying or investing in the wrong market or neighborhood may result in you being stuck with the problems that go along with that particular investment property because of its location. Your only solution may be to sell such an investment property at a loss rather than keeping it. It is therefore more important to be concerned about the overall market health and its future prospects than to be tempted and end up losing your investment money in the long run because of choosing your real estate market poorly.
If you don’t start with the right market and/or neighborhood in mind, over time you’ll experience more tenant vacancy rates, short lease terms, increased late payments or tenant defaults and decreased or diminishing property values instead of appreciation.
If the market you wish to invest in happens to have a fair balance of these five real estate market investment indicators, then it makes business sense to invest in such a market. If not, then find another market where these investment fundamentals balance up. Otherwise you might find yourself running at a loss.
Many real estate investors often make the fatal mistake of buying and/or investing in investment real property with little to no consideration of the market, area or neighborhood the property is located in. This can be one of the deadliest mistakes an investor can commit because buying or investing in the wrong market or neighborhood may result in you being stuck with the problems that go along with that particular investment property because of its location. Your only solution may be to sell such an investment property at a loss rather than keeping it. It is therefore more important to be concerned about the overall market health and its future prospects than to be tempted and end up losing your investment money in the long run because of choosing your real estate market poorly.
If you don’t start with the right market and/or neighborhood in mind, over time you’ll experience more tenant vacancy rates, short lease terms, increased late payments or tenant defaults and decreased or diminishing property values instead of appreciation.
So, what else can you do in order to help you increase your chances of choosing the right and perfect real estate market to invest in?
Well, working with a good and reputable real estate agency investment organization can help you find or help provide you with real time investment advice and opportunities to help you make informed investment decisions. Such an organization should be able to advise you on the various markets and/or neighborhoods as well as provide you with detailed market date and information on local economics and housing or real property investment trends currently obtaining in a particular market or area of your particular interest!
So, until next time, go well in your own real estate investment efforts!
I love to hear your comments. Both positive and negative ones are all welcome.
So, go right ahead and drop a comment in the comment box below or simply Call / Sms +260 955 168754 for instant feedback!
NOTE: Looking for property to buy, rent or simply looking to sell your own property as quickly as possible and not sure as to what strategy to use and apply in order to help you sell your own piece of real property in record time? Well, then get in touch with David Kapalu – our Principal Agent - using the following contact details: +260 955 168754 / +260 966 388525 / +260 977 805045 or simply WHATS-APP him on: +260 966 388525 or alternatively surf this Website right here or see other current property listings on this Facebook Page Link by clicking ->HERE!.
So, until next time, go well in your own real estate investment efforts!
I love to hear your comments. Both positive and negative ones are all welcome.
So, go right ahead and drop a comment in the comment box below or simply Call / Sms +260 955 168754 for instant feedback!
NOTE: Looking for property to buy, rent or simply looking to sell your own property as quickly as possible and not sure as to what strategy to use and apply in order to help you sell your own piece of real property in record time? Well, then get in touch with David Kapalu – our Principal Agent - using the following contact details: +260 955 168754 / +260 966 388525 / +260 977 805045 or simply WHATS-APP him on: +260 966 388525 or alternatively surf this Website right here or see other current property listings on this Facebook Page Link by clicking ->HERE!.
ABOUT DAVID KAPALU
David Kapalu is a Real Estate Investment Consultant who happens to be a duly Registered Member of the Zambian Institute of Estate Agents, an Internet Marketing Specialist, Motivational Speaker, Public Speaker, Life Coach, Crypto-Currency Investor and Enthusiast and Trainer. He is also a 4th Year Bachelor’s Degree Law Student Studying with the Zambian Open University. He is Someone who Understands his Subject so Well and Knows how to Reduce Complex Matters into Simple to Understand Matters.
Therefore, Call/WhatsApp/Sms him right now on +260 966 388525 and contract him for one on one real estate investment advice!
He also stands ready to be booked for speaking engagements as well as offer free and paid radio and television interviews with any individual or organization interested in him sharing his deep insight and understanding of real estate matters as well as offer legal advice pertaining to land rights and ownership in the Zambian Market Land Scape!
STILL Want to Know More about David Kapalu? Well, Then Click Right ->HERE for Details!
Therefore, Call/WhatsApp/Sms him right now on +260 966 388525 and contract him for one on one real estate investment advice!
He also stands ready to be booked for speaking engagements as well as offer free and paid radio and television interviews with any individual or organization interested in him sharing his deep insight and understanding of real estate matters as well as offer legal advice pertaining to land rights and ownership in the Zambian Market Land Scape!
STILL Want to Know More about David Kapalu? Well, Then Click Right ->HERE for Details!
