Atlanta: Why Georgia should be on property investors’ minds

The USA remains the most sought-after destination on, as investors continue to flock to Florida, New York and Detroit. One destination that property buyers may not have considered, though, is Atlanta.

The city in Georgia was one of the most in-demand markets in 2014, following the financial crisis, as fallen prices and a strong tenant population pushed demand rapidly upwards.

“Every tenanted property that came on the market was subject to a biding war, everybody wanted a slice,” explains Mike Moodie, CEO of US property specialists Global Investments Incorporated.

That level of interest, though, could not be sustained: in 2015, demand dropped 26 per cent on year-on-year and continued to slide.

Now, 10 years on from the financial crisis, the US real estate market is enjoying a stable recovery, albeit one that is held back by a lack of supply. The low level of inventory is especially evident in the Downtown Atlanta area and North Atlanta suburbs. Over the last two years, during the summer months, there were essentially the same number of homes on the market as the number of sold, says Moodie.

Indeed, the National Affordable Housing Management Association highlighted actions by Atlanta government leaders and developers in an analysis of rental conditions in cities across the country, noting that teachers, firefighters, police, retirees, and others are having difficulty affording to live in the cities they serve.

“The City of Atlanta is currently experiencing a surge in multifamily housing construction brought about by a strong regional economy and growing demand for urban living. However, most of the rental housing delivered over the course of the last several years is unattainable to entry-level employees and public servants working in the municipality proper,” said the NAHMA.

In some areas, notes Moodie, inventory shortages have resulted in price appreciation of 10 per cent or more.

With demand therefore outpacing supply, price growth is continuing. According to Zillow, Atlanta has seen values rise 8.1 per cent in the last 12 months to an average of $179,900, with prices forecast to climb another 4.5 per cent in the coming year. Rents, meanwhlie, have risen 3.4 per cent in the year to June 2017, and have risen 13 per cent since 2014.

“The market has levelled out somewhat due to increased property prices and a poor supply of inventory,” adds Moodie, “but demand is still on the rise, the majority of investment properties being offered today are vacant in need of refurbishment and often over 30 minutes from the city.”

Investors are beginning to return to the city, with enquiries for Atlanta properties up 12.5 per cent in Q2 compared to Q1. The population of Atlanta is expected to increase by 43 per cent from now to 2025, which will push demand higher for rented properties. Atlanta is a major transportation hub with one of the busiest international airports in the world receiving 16.5 million visitors each year

Nonetheless, enquiries are far below where they once were.

“Currently, it is not ticking every box for the overseas investor,” admits Moodie. “There is a huge demand for rented properties, but this is not being backed up by a supply of turnkey properties, especially ones that are not subject to a bidding war.”

The company forecasts that Atlanta will remain a seller’s market going forward, as modest construction of new housing and low turnover of existing housing stock keeps inventories low and elevates prices. Nonetheless, Moodie forecasts a comeback for the city as an investment hotspot.

“We have been looking at this market for over three years now, but could not offer the right product to our investor clients,” explains Moodie. “We did not want our clients to be part of a bidding war or purchase vacant properties that need work.”

Now, Global Investments Incorporated has signed an exclusive agreement to 49 townhouses 15 minutes from Downtown Atlanta, all of them refurbished, tenanted and within a secure, well-maintained development.

“This is one of the best developments to come on line in the US in recent years and we expect to be sold out very quickly,” adds Moodie. “This product will provide a steady return for our investors coupled with good appreciation in the coming years. The fact that it has finance attached to it as well opens the door also for other buyers that may not normally be in a situation to move froward with a cash purchase.”

The company aims to bring similar products in the area to market in the coming year.