Why it makes good business sense to invest in property in Atlanta

When the YDL Property Investments team initially investigated investment opportunities in the United States, we had a number of criteria that the perfect location would need to meet. We made several visits to America, and consulted with many experts in the property arena, from real estate agents, to builders, architects, and property lawyers to ensure we had a comprehensive understanding of potential cities on which to focus.

Just a few of the questions we asked included:

  1. What are the economic drivers and growth rate forecasts for the region and the city?
  2. What are the property market supply and demand drivers?
  3. Is it a buyer or seller’s market?
  4. What are the median house prices and the projected house price growth rates?
  5. What have the historical property market trends revealed about available inventory in the area?
  6. What is the current inventory like? What are the new housing construction statistics?
  7. What is the expected household income growth?
  8. What is the affordability of home ownership in the area?
  9. What are the average rental rates in the area, and what are the expected rental growth rates, and yields?
  10. What are the interest rate expectations in the mortgage market?
  11. What are the future development plans for the area – do we see growth or stagnation?
  1. What is the ease of doing business in the area?
  2. Is there a strong business community, with a number of US corporate head offices in the area?
  3. Are more businesses expected to relocate to the city?
  4. What is the availability of well-qualified, talented employees?
  1. Is the job market growing?
  2. Is the population growing at a steady rate?
  3. What is the cost of living, and how does it compare with other cities?
  4. Is the area safe?
  5. What amenities are available for residents and what is the public transport system like?
  6. Are there good schools in the area?
  7. Is there a leading university in the area?

Atlanta, the Georgia state capital, stood out as city that offered the best opportunity for real estate investment.

An Overview of The Atlanta Property Market

The National Association of Realtors’ Atlanta-Sandy Springs-Roswell Area Local Market Report, Fourth Quarter 2017 gives good insights into the property market in Atlanta.

Today’s Market…

Copyright © 2018 NATIONAL ASSOCIATION OF REALTORS®. All rights reserved.  Reprinted with permission.

 

Local Price Trends
Price Activity Atlanta U.S.  Local Trend
Current Median Home Price (2017 Q4) $198,900 $246,567 Prices continue to grow relative to last year 
1-year (4-quarter) Appreciation (2017 Q4) 8.7% 5.4%

New Housing Construction

Copyright © 2018 NATIONAL ASSOCIATION OF REALTORS®. All rights reserved.  Reprinted with permission.

 

New Housing Construction
Local Fundamentals Atlanta U.S.
12-month Sum of 1-unit Building Permits through Dec 24,508 Not comparable The current level of construction is 72.4% above the long-term average
8-year average for 12-month Sum of 1-Unit Building Permits 14,216 Not comparable Production above trend for an extended period of time could cause prices to moderate as inventory is built up
Single-Family Housing Permits (Dec) 12-month sum vs. a year ago 7.9% 9.7% Construction is on the rise relative to last year, suggesting that the local inventory has stabilized

State Economic Activity Index

State Economic Activity Index

State Economic Activity Index Georgia U.S.
12-month change (2017 – Dec) 4.3% 2.7% The economy of Georgia has outpaced the rest of the nation and improved modestly from last month’s 4.28% change

Affordability

Copyright © 2018 NATIONAL ASSOCIATION OF REALTORS®. All rights reserved.  Reprinted with permission.

 

Copyright © 2018 NATIONAL ASSOCIATION OF REALTORS®. All rights reserved.  Reprinted with permission.

 

Affordability
Monthly Mortgage Payment to Income Atlanta U.S.
Ratio for 2017 8.9% 16.0% Historically Strong
Historical Average 9.8% 18.9% More Affordable than most markets

Median Home Price to income

Copyright © 2018 NATIONAL ASSOCIATION OF REALTORS®. All rights reserved.  Reprinted with permission.

 

Median Home Price to income
Median Home Price to income Atlanta U.S.
Ratio for 2017 1.6 2.8
Historical Average 1.4 2.7

“REALTORS® expect higher price growth in Georgia than in the U.S. in the next 12 months. Their price expectations are also higher than a year ago.”

Atlanta attracts business professionals and families

Atlanta is home to 5.8 million people, and more than 160,000 businesses, including the head offices of 15 Fortune 500 companies, 26 Fortune 1000 companies, and 220 of the nation’s fastest-growing private companies. These include the headquarters of major US companies like Coca-Cola, Delta Air Lines, SunTrust Bank, CNN, AT&T, Home Depot and Sony. The Atlanta Metropolitan Statistical Area (MSA) is the business capital of the south-eastern U.S. and a global business hub. Metro Atlanta is one of the fastest growing metros in the U.S. and has the 10th largest metro economy in the U.S. as measured by Gross Metro Product (GMP).

According to U.S. Census reports, Metro Atlanta gained the fourth-most residents in America last year, adding 90,650 additional people to the area. As the ninth-largest metropolitan area, the region grew by 1.6 percent from 2015 to 2016.

The area continues to attract business professionals and families, who are drawn to the business-friendly environment and low cost of doing business, and living. The area’s exceptional quality of life offers residents access to an abundance of arts, culture, sports and nightlife. Atlanta’s growing population benefits from great neighbourhoods, school systems, and universities, good infrastructure, and solid appreciation of their real estate investments. According to the US Census Bureau, Atlanta is projected to be the 6th most populated metro area with a projected 7.3 Million strong population by 2020.  

A recent KPMG report showed that Atlanta has the lowest relative cost of doing business among the US’s 10 largest metro areas. Statistics released by the Bureau of Labor Statistics and the Atlanta Regional Commission revealed that a further 77,000 jobs were added in the region in 2016 alone. It is recognised as an international gateway with an extensive intermodal network of air, road, rail and port, and is the economic engine that drives the Southeast.

Why Atlanta is appealing to South African property investors

Atlanta’s suburbs and metro area have seen constant growth over the past decade, and are bolstered by continued job growth and a strong local economy. For those considering foreign property investment, Atlanta offers prices that are more affordable to South Africans, who are purchasing in Rands, compared to many other large cities in the USA.  This is true for both speculative (buy-renovate-sell) and buy-to-let opportunities.

Future development plans in the area include the building of Facebook’s sprawling new data centre in Walton County about 40 miles east of Atlanta which will bring an influx of new residents and offer more job opportunities to Atlanta locals, as happened when Interface and NCR moved their operations to the area.

There are also at least seven significant projects that are either completed, or in final stages, around metro Atlanta, including two sports complexes, Avalon in Alpharetta, and Pinewood Studios in South Fulton County which adds to the area’s growing movie industry.

Metro Atlanta is in a strong seller’s market for properties below $500,000. Inventory is low, and demand is high. The 2018 ULI Real Estate Economic Forecast (a survey among economists and analysts) predicts Atlanta home prices are expected to rise by an average of 5.3% in 2018, and 4.3% in 2019.

Forbes Outlook

Forbes recently included the Atlanta-Sandy Springs-Marietta metro area in its list of the 20 best housing markets to invest in for 2018.

Atlanta’s key metrics revealed the following statistics:

  • Average home price: $234,249
  • 3-year population growth: 4.9%
  • 2-year job growth: 5.1%
  • 1-year home price growth: 8%
  • 3-year price growth forecast: 24%
  • Homes are undervalued by 7% compared to the historic ratio of price and local income.

The BeltLine is a former railway corridor around the core of Atlanta, under development in stages as a multi-use trail. Some portions are already complete, while others are still in a rough state but hikeable.

Conclusion

Simply put, Atlanta, GA, USA ticks all the boxes as a sound city for property investment

Note: Much of the above information is based on research done by the Metro Atlanta Chamber of Commerce, The National Association of Realtors, and Forbes.

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