Buying property close to a trendy café or dining hotspot might sound appealing but also prove to be a very clever investment strategy.

According to mortgage broker Mortgage Choice, you should aim for the best location you can afford with lifestyle features, irrespective of the type of property you’re thinking of buying. "Location is probably the single biggest factor that will impact the future value of your investment," says Mortgage Choice. 

The question is what makes a location valuable?

Prime real estate

While we often think of a prime location with an attractive lifestyle as being close to the waterfront or near beautiful parklands, vibrant retail settings have become equally important.

To this end, managing director of buyers’ agency Propertybuyer.com.au, Rich Harvey says that being close to popular amenities is high on his property investment checklist.

"It’s absolutely a factor," says Harvey. "I think a lot of people get caught up in the number of bedrooms, the aspect and size and all of that, which are all fairly cosmetic. What investors need to do is focus on the piece of land where the property is located. 

"Pubs, cafes and restaurants create the amenity value of the property. So if you have a property in Bondi near the beach, for example, then you have a hoard of cafes, pubs and restaurants to attend. If you live in Manly near the esplanade it’s also going to be fantastic. 

"Cafes [restaurants and pubs] add to the lifestyle appeal and they’re where renters want to be. They want to be near the action, to feel the vibe and pulse of the city. So they [amenities] definitely increase the value." 

It’s the vibe

The trend toward hip and often rustic cafes and bars has been driven by increasing numbers of young and cashed-up professionals moving in. For example, we've seen suburbs like Newstead in Brisbane, Collingwood in Melbourne, Glebe in Sydney and North Perth all grow in popularity lately due to the lifestyles they offer.

Collingwood, for instance, saw its median house price jump by 19% to $880,000 last year, according to CoreLogic RP Data, while houses in Glebe soared by 31% to $1.5m over the same period.

In Sydney's inner city suburb of Paddington, well known restaurants and cafes also draw eager buyers. Sales Consultant at real estate agency BresicWhitney, Catherine Dixon says that she typically sees young buyers come to Paddington looking to live near a favourite café like Alimentari or a restaurant like 10 William Street.

"They definitely have an interest in being near places like Alimentari on Hopetoun Street, where there are some of the best prices," says Dixon. "They also have an interest in being where Five Points is, close to Jackie’s Café. That area around there is very popular, as long as you’re in walking distance, though not living next door.

"The market demographics in Paddington have changed a lot, where we have about 50% single female purchasers, whether it’s $400,000 or $4m. On top of that about a third of the market comes from the north shore - older couples that are 50 or 60 plus with teenage kids and they want the convenience [of the inner city]. 

"As they come over to check out the area, they’ll often sit in a café and that’s how they first get to know the area. They wander around the shops, pick their favourite café and then they’ll come to us and say, ‘I really prefer the area around Flat White [café] near Jersey Road or I really prefer it around Gordon Street, where the café is there, or Five Ways, or Alimentari. 

"So Paddington gets split up according to where their favourite niche area is."

By Jean-Paul Pelosi

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