What? No capital gains on main roads?

By Justin Eslick

Recently someone said to me that they didn't want to buy a property on or near a busy road because of the lack of capital gains. This had me puzzled. If properties on main roads do not go up in value, why aren't they are worth two pounds now?

So to dispel this statement I'd like to point out that properties on busy roads, backing onto train lines, next door to industrial uses, located in a flood area or other similar negative issue do have capital growth. In fact, growth wouldn't be much lower than the growth of nearby property with no negative attributes and in a quiet street.

The difference is these negative properties are worth less than a well positioned property and always have been, but they still have good growth!

In fact there are some positives to owning properties on main roads and train lines. They often have increased densities or are more likely to have an up-zoning in the future. They are also usually close to transport and shops. And probably the best bit is they generally have higher rent returns.

Some big negatives exist too. Higher rent returns is made void by a higher turnover of tenants. These properties also have a greater chance of resumption with a road or rail widening.

On the whole I probably prefer nicely located property, but 'buying in the ways', as Paul Eslick calls it, isn't something to avoid completely. Just understand the risk, negotiate hard and buy well!