Why Buy a Memphis Investment in the USA?

Well there’s the capital growth for starters.

Demand Institute’s “Tale of 2000 Cities Report” predicted the median property price will  rise 33% by 2018. (Date: 26th February 2014)

Then there’s the tourism thanks to Elvis!

graceland

His Graceland Mansion still attracts over 600,000 visitors every year.
This makes it the 2nd most visited house in the United States (behind only The White House).

But when it comes to the USA it is the fundamentals that count, and that’s where Memphis rules the world!

The city is one of the USA’s major transport hubs.
In fact, Memphis International Airport (MEM) has the 2nd largest cargo operations in the world by volume.
And it generates a staggering US$ 28.6 billion for the Memphis economy every year.
Memphis also has the 2nd busiest cargo port on the Mississippi River.  This has an economic impact of more than US$ 7 billion per year.  And it’s a key connection point for 5 Class 1 railroads and 3 Interstate highways.
What’s more, US$ 500 million has been invested on infrastructure over the past 10 years as part of the Memphis Regional Freight Infrastructure Plan.

Almost 11% of Memphis’ GDP comes from the leisure and tourism industry. (Source: Greater Memphis Chamber)
You see, the city attracts over 10,000,000 visitors every year.  Much of this is due to its musical history.  Jerry Lee Lewis, Johnny Cash, Elvis Presley, Carl Perkins, Roy Orbison, Otis Redding, B.B. King and many others got their start in Memphis in the 1950s and 60s.
Most of them made their first recordings at Sun Studio in Beale Street – now a major tourist attraction.

Tourism has an estimated economic impact of  US$ 3.2 billion per year.  On top of that, the industry employs over 50,000 people full time.  And the good news is it’s growing at around 3% a year.
(Source: The Memphis Convention & Visitors Bureau)

2. Employment levels and job creation
The unemployment rate in Memphis peaked at 10.5% in October 2009.  By April 2014 it had dropped to 8.4%.  And it is still falling because companies expanding or relocating to Memphis Metro are expected to create over 4,000 new manufacturing jobs by 2016.

As of February 2014 there were 623,277 people employed in the Metro area.   Up from 607,500 one year earlier.   That’s 15,777 new jobs.

3. Population growth
The population of Memphis is growing fast.  Between 2000 and 2012 the population of Metro Memphis grew from 1,135,614 to 1,340,940.

That’s an 18.08% increase and by April 2014 it was estimated to be 1,369,006. That’s another 28,066 people who need housing.

In the City of Memphis itself numbers swelled from 647,780 to 655,155 between 2012 and 2014 and in Shelby County as a whole (where most of our properties are located) the increase was even higher.  The population grew from 928,792 to 940,764.  That’s an extra 11,972 people who all need somewhere to live.  This is keeping housing inventory low and pushing prices up.

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4. Housing supply and demand
Housing supply (inventory) in Memphis has dropped dramatically over the past few years.  And the number of properties on the market continues to fall.  This is partly due to a decrease in the number of foreclosures.  For example, in Q1 2014 there were just 846 foreclosures – compared to 1,129 in Q1 2013.  That’s a 25.1% drop.

But thanks to the rising population and continued job creation, demand is increasing too.
Property sales in March 2014 were up 2.92% on March 2013 and Downtown Memphis apartments were 95% occupied.
So it’s no surprise that numerous new residential projects are underway.

5. Affordability of property
Property in Memphis is very affordable right now.  In case you don’t already know, affordability is the ratio between median household income and median house prices.
The median household income in Memphis is US$ 45,687 per year and the median house price is US$ 115,000.
So as you can see, the median house price is only 2.52 times median household income.
That is extremely low.
When a housing market is this affordable it means there is lots more room for price increases.

But you need to take some action to benefit from this.  By the end of March 2014 the median sales price for single family homes had risen by 18.8% year-on-year.

6. Rental yields
Rents in the City of Memphis rose by an average of US$ 43 between March 2013 and March 2014 bringing the average rent for a 3 bedroom single family home to US$ 857 per month.
That’s an increase of 5.28%.

7. Current investment.
If you’ve ever been to Memphis you probably know the Medical District because it plays such a big part in the Memphis economy.  It’s right on the edge of Downtown and is home to:

  • 15 major hospitals
  • 58 emergency rooms
  • 226 medical clinics
  • 4,527 physicians and surgeons
  • 306 medical suppliers
  • 172 research facilities and medical laboratories
  • 5 top universities

Over 40,000 people work in the Memphis Medical District (17,000 of them in medical related jobs).  Every year more than 700,000 patients are treated and over 10,000 students attend universities there.
What’s more, it generates over US$ 12 billion a year for the local economy.  But the most interesting thing is it is undergoing extensive re-development.

In January 2014 the Urban Land Institute (ULI) unveiled plans to turn the area into an “innovation business district that combines urban living and economic development”.
This means constructing more commercial and retail complexes, building new homes and improving infrastructure.  The budget set aside for this is over US$ 2.8 billion.  And private investors are moving to cash in.  In fact, already several new projects totalling
US$ 780,400,000 are under construction.

These include:

  • The new US$ 450,000,000 Baptist Research Park at the University of Tennessee
  • A US$ 190,000,000 extension to St Jude Children’s Research Hospital
  • The new US$ 49,000,000 University of Tennessee Health Science Center
  • A US$ 44,000,000 renovation of the Veteran Affairs Medical Center
  • And the new US$ 200,000,000 Le Bonheur Women’s and Infant’s Hospital

Memphis is also home to the headquarters of many famous international brands.
And several have shown their commitment to the city by investing heavily.

These include:

  • Electrolux
    In May 2013 the firm moved its manufacturing plant from Montreal in Canada to Memphis at a cost of US$ 266,000,000.
  • Nike
    Is working on a US$ 301,000,000 expansion of its Memphis Distribution Center.
    275 new jobs will be created.
  • International Paper (IPC)
    Is investing US$ 361,000,000 on new facilities in the city.
    These include a US$ 115,700,000, 9-storey, 235,000 sq. ft. tower opposite its headquarters in East Memphis.
  • Unilever
    Is working on aUS$ 108,700,000 expansion of its Covington facility.
    This will turn the “Ben and Jerry’s” plant into the largest ice-cream manufacturing factory in the world by 2016. It will create 428 new jobs.
  • United Parcel Service (UPS)
    Is investing US$ 25,000,000 expanding its Memphis sorting facility.
    The project will create 100 full time jobs.
  • Hino Motors Manufacturing USA
    Is working on a US$ 55,000,000 extension to its Memphis factory.
    This will create 200 new jobs.
  • Smuckers
    Is investing US$ 55,600,000 in its Memphis manufacturing plant.
    It plans to add 65 staff at the state-of-the-art peanut butter facility.
  • Memphis International Airport (MEM)
    Is undergoing a US$ 114,000,000 modernization.
  • And don’t even get me started on Fedex :-)

So that’s why Memphis is our number one and only preferred city to invest in.

Won’t you join us?
Starting is as  simple as CLICKING HERE

 

Talk soon, Dan @ Memphisinvestment.com