This may seem an odd name for something to do with real estate. But it’s appropriate, we think, because it relates to the story of the ugly duckling which evolved into a beautiful swan. This kind of thing can happen in real estate.
Every major city in Australia has suburbs which once were considered downmarket areas, or rough areas, or “social security
areas” – suburbs that were stigmatized in some way and where many people would not have chosen to live.
But they’ve changed. They’ve been discovered. They’ve become gentrified. In Melbourne, Richmond was once considered a downmarket area but today it’s a trendy area and quite expensive. In Sydney, there are areas with lots of cute workers cottages – like Balmain – which once were considered down-market but now are greatly sought-after.
In Brisbane, the Bulimba area was once considered downmarket and undesirable. It was a rough precinct and its main street, Oxford Street, was not a prosperous place. There were no cafes, businesses were struggling and there were many empty shops. The pub was a dangerous place and the one-screen cinema was a candidate for demolition.
Today Oxford Street is one of Brisbane’s trendiest destinations. Restaurants and cafes everywhere, lots of boutiques, the pub has been converted into a family entertainment centre and the picture theatre is a modern multi-screen cinema complex. Residential property values have grown strongly (the median price has grown at an average rate of 13% a year since 2013, well above city averages.)
Bulimba, and nearby suburbs like Balmoral and Morningside, got “discovered”. People began to realize the area was close to the City, it was on the Brisbane River, there were lots of character Queenslander houses on big blocks of land, and it was cheap. People bought houses and renovated. Very quickly the area became popular.
Bulimba was an Ugly Duckling suburb which evolved into a real estate swan. And this kind of process will keep happening. Usually it happens quite naturally. This is not a planned urban renewal process by government, but a natural evolution.
But sometimes it has a boost from a government entity. Bulimba, for example, was a beneficiary of the SCIP program. SCIP means Suburban Centre Improvement Program, a scheme run by the Brisbane City Council to spruce up the main streets of selected suburbs. It wasn’t the main reason Bulimba was transformed, but it helped.
The Ugly Duckling syndrome has become one of the most significant influences in real estate.
Ugly Duckling locations which have had price booms:
Blacktown, New South Wales
Ipswich corridor, Queensland
Frankston suburbs, Victoria
Marrickville, New South Wales
For one important reason: affordability.
Recent price rises mean many people seeking to own their home are forced to consider areas they might have previously rejected. This is why middle-ring and outer-ring suburbs often show the best capital growth rates in our major cities.
To be an Ugly Duckling hotspot, suburbs need to be more than just cheap. They need to have identifiable reasons to grow and improve.
It also helps (in these days of high petrol prices, road tolls and CBD parking fees) if they are connected to the city centre by rail. That’s why we refer to our favoured Ugly Ducklings as “Cheapies with Prospects”.
Frankston in the Melbourne metropolitan area is a prime candidate to evolve into a real estate swan: its bayside, it’s where the new EastLink motorway starts, it’s on the train line to Melbourne’s CBD, there’s lots of government money being spent to improve the foreshore – and it’s affordable.
Rockingham City is the south-west of the Perth metropolitan area has similar qualities.
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The next article in this series is How to Identify Real Estate Hotspots #03: Urban Renewal & Government Policy
This is a joint publication of Snowden Parkes and Ryder Property Research.
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