Emerging markets provide promise for real estate investors, giving them the opportunity to buy low and sell high as demand for properties in those areas increases. There are several factors that make an emerging market, whether it’s a secondary or tertiary market, desirable for both investors and new residents. Infrastructure and transportation improvements can have a significant impact on these markets, so let’s take a closer look at just how much they can transform the landscape of a region.
Improvements in public transportation services can connect tertiary markets with larger cities, making them more desirable for commuters looking to move to more affordable areas. Public transit improvements might include expanding bus and rail service to cover a larger area, increasing the frequency of buses, or even adding shuttle services from suburban areas to downtown city centers for the area’s biggest employers.
The emerging market of Greenville, South Carolina undertook a large-scale expansion to its Swamp Rabbit Trail, a 22-mile walking and biking path. While not a traditional public transit system, it makes the area more accessible for those looking to bike to work or those who want to live in an area with expansive green spaces for outdoor exercise. Plans for the city’s Greenlink bus system included federal grant funding to improve bus stops and provide additional services for riders. These public transit improvements, combined with other infrastructure projects, may have driven the area’s real estate growth. The year-over-year increase in multifamily rents for the Greenville area in 2022 was approximately 9.6%, showing just how much public transportation and other upgrades can help emerging markets come into their own.
Roadway improvements in secondary and tertiary markets can take many shapes. Some smaller cities need access to major interstate highways to make them more desirable, while others simply require traffic lights in neighborhoods with more congestion due to increases in residents. Improving roadways can make it easier for commuters to move into a neighborhood while still having easy access to the office, and they can also work to prevent traffic problems that result from an influx of new residents.
One example of roadway improvements having an impact on an emerging market is Fayetteville, Arkansas. The 8th Street Interchange project undertaken in the Fayetteville Suburb of Bentonville provided traffic relief for the town while providing residents easier access to the larger city center via I-49. Connecting the I-49 corridor provides more opportunities for commuters to live outside of downtown Fayetteville, expanding the market and offering real estate investors more options in the area. In 2022, Arkansas was among the top 5 states for rent increases, and just one of the recent multifamily property sales in Bentonville topped out at $51 million for a 356-unit development.
Other types of roadway upgrades might include adding exits to nearby highways for easy access, adding overpass bridges to alleviate congestion, or widening roads to accommodate more traffic. As these improvements are undertaken, drivability for commuters and local residents improve, creating a more robust and inviting market for real estate growth.
Neighborhood Revitalization in Emerging Markets
Revitalizing neighborhoods in emerging markets can breathe new life into a real estate market. New developments and rehabs of historic buildings can bring new businesses to an area as well as new residents. Some cities and towns may look to redevelop once-vibrant city centers, while others may choose to rehab historic neighborhoods to attract both tourists and residents.
Richmond, Virginia is one example of a city revitalizing historic neighborhoods and rethinking industrial areas to entice residents and businesses. A former Reynolds metal manufacturing plant was reimagined as a mixed-use development with flexible office spaces, apartments, and businesses. The location in a historic neighborhood with access to both the James River, dining, and shopping provided new residents with an incentive to move to the area. The city’s 17th Street Market was rehabbed, giving the state’s longest continuously running farmers market new life and supporting additional local businesses, such as food trucks and other vendors. For 2023, rents are up almost 3% year-over-year, highlighting just how much unique infrastructure improvements can benefit emerging markets.
Upgrading public transit, improving roadways, and revitalizing neighborhoods can help make secondary and tertiary markets thrive, leading to potential increases in real estate value. As investors look for areas to purchase property, it’s important to look at both past renovations and plans for new infrastructure projects to help determine the strength of the market. To learn more about how DiversyFund can help you invest in real estate in emerging markets, click here.