Up-and-coming neighbourhoods represent the strongest potential earnings in real estate investment. Given that condo prices increase after development has finished, buying pre-construction is often the smarter alternative to maximize your profit. With new condos popping up all over the place in Toronto, choosing wisely means predicting the price behaviour of a given neighbourhood’s realty.
There are a few ways you can identify an undervalued neighbourhood so you can get the most out of your property investment and find the smarter alternative:
Can a neighbourhood induce chance encounters between different kinds of visitors? Researchers at the University of Cambridge have pointed to this kind of social diversity as a predictor of highly likely gentrification in undervalued neighbourhoods. Imagine spots where strangers from various walks of life are likely to meet. Communal spaces or activities—like street food vendors, dog parks, playgrounds, public pools, and public libraries—are likely to draw together a wide variety of people. And check out the pedestrian traffic; there’s no place more communal than the sidewalk! If it’s bustling, you’re likely to see growth in this area.
Communal spaces around the Empire Midtown include the newly-renovated Toronto Public Library building, with its stunning contemporary look by Gow Hastings Architects. There are three city parks within two square kilometres: the Walter Saunders Memorial Park (basketball courts, playground, and bike trail), the Fairbanks Memorial Park (community centre, outdoor pool, and bocce courts), and Cedarvale Park, one of Toronto’s biggest green spaces, which boasts tennis courts, a baseball diamond, and one of the city’s most beloved dog parks. And then there’s the York-Eglinton International Street Festival, an annual late-summer celebration during which the streets fill with live music, dancing, food and drink vendors, and carnival rides.
You may be a bit annoyed with the road closures resulting from the construction of the Eglinton Crosstown LRT, but this $8.4 billion dollar, 19-kilometre east-west rail line is set to transform the atmosphere of the area upon its completion in 2021. The Toronto Star’s urban issues columnist and architecture critic, Christopher Hume, predicts the Eglinton West neighbourhood is “on the verge of big change”. The LRT will “completely change Eglinton and, with it, the city,” and will “bring life to the street, and bring vitality to Eglinton,” says Hume. Coming off the past 20-plus years of almost no transit investment, Toronto is overdue for a major public transit update and evidence shows that the city’s population is thirsty for better, broader, and more efficient transit service. Under-served commuters will flock to the LRT.
In Vancouver, the construction of the SkyTrain (a rapid light-rail transit system similar to the Eglinton LRT) significantly changed the demographic and value of the neighbourhoods surrounding the train’s stations. A 2010 research study showed these areas became wealthier, physically denser, and more educated compared to Vancouver as a whole. Citing urban economists, the study concludes that “improving transport to a location can simultaneously increase the land’s value… property owners near transit stations are poised to gain additional profit because of the locational proximity to a rail station.”
A 2014 research study showed that neighborhoods that gentrify have a shared trait in common: rich neighbours. People gravitate to low crime rates and good schools, which are more often available in rich neighborhoods. Living in close proximity to a wealthy neighbourhood allows residents to take advantage of the area’s amenities and advantages without the high price tag. The value growth spreads on its own: “As new residents move onto those nearby blocks, house prices there start to go up… [and] other similarly affluent households take note and move in, further increasing house prices. The process spreads organically.”
The Empire Midtown’s neighbourhood is definitely undervalued when compared to its affluent neighbours, only a few blocks away. The recently-built freehold townhouses next to the Eglinton West subway station are selling for almost $1M. And the exclusive Lycée Français Toronto, a private French international school for K-12 students located a few blocks west, is widely acclaimed for its culture, curriculum, and high academic standards.
Imagine something where there was nothing. Toronto has been praised for its heritage and industrial space conversions and the positive effects they’ve had on surrounding areas. Did you know that the charming and highly-profitable Distillery District was abandoned and mostly unused throughout the 1990s? It’s now one of the top tourist destinations in the city, home to fine dining, galleries, and hip brewpubs.
Similarly, both the Drake and Gladstone hotels were once aging century-old properties until they were heavily renovated and re-branded. In the last decade, they’ve transformed West Queen West beyond recognition from a low-income, formerly industrial neighbourhood into one of the coolest strips in the world. And the new location of the Museum of Contemporary Canadian Art (MoCCA) is set to be one of the most impressive and efficient uses of an abandoned industrial space this city has ever seen. In 2017, MoCCA will occupy the first two floors of the Tower Automotive Building in the Junction Triangle, only adding to that neighbourhood’s already-budding gentrification and rejuvenation.
Eglinton West and its surrounding areas boast their fair share of underused industrial and commercial spaces, ripe for rejuvenation. And as an undervalued neighbourhood, such spaces have become a smarter alternative for art and culture organizations whose budgets may be low but whose cool factor is always high. After all, every realtor’s guiding principle of gentrification is: follow the artists.
So there you have it: the smartest way to invest in property and get better value in today’s crowded market is to spot the undervalued neighbourhoods, ones which are set to increase in density, wealth, and diversity in the coming years. Look for the smarter alternative; after all, real estate investment is all about how much you know! Keep your eyes open for the best condo investment properties in up-and-coming neighbourhoods, and you’re sure to see an excellent return on your investment.