The physical properties of natural gas hydrate-bearing sediments are critical for the analysis of natural systems and for the design of gas production strategies. This work explores the properties of fine-grained sediments containing segregated hydrate lenses. Our analyses show that hydrate formation is grain-displacive when the product of the effective stress and the grain radius is σ′R < 2πΓhw ≈ 0.2-to-0.3 N/m, such as in shallow fine-grained sediments. The assessment of physical properties is particularly challenging in fine-grained sediments with segregated gas hydrate because (1) inherent difficulties in hydrate formation hinder laboratory studies, and (2) segregated hydrate requires large specimens and laboratory devices to avoid boundary effects and to create a representative volume for analysis. We circumvent these challenges through the use of numerical simulations. In these simulations, the properties of the hydrate-free sediment surrounding the segregated hydrate lenses take into consideration the effects of cryogenic suction and grain-displacive hydrate growth. Our results for mechanical properties and conduction show that numerical simulations must properly consider the hydrate morphology, the altered sediment properties, and the sediment-hydrate interfacial conditions (interfaces are rough, jagged and well bonded during hydrate formation, but become weak-frictional on dissociation). In fact, changes in the strength and stiffness of the hydrate-free sediment that surrounds a segregated hydrate mass can be more important on the global properties than the presence of hydrate itself. Numerical simulations highlight distinct anisotropy in mechanical properties and conduction in the presence of segregated hydrate lenses, and the tendency to shear localization when there is a weak-frictional interface. We emphasize that a relatively small fraction of fines can make sediments prone to segregated hydrate formation, therefore proper sediment classification is critical.