Roger Tidyman of United Bank London considers how builders and developers should approach a hard market.
It’s a shocking fact, but up to 20% of builders and developers “forget” to market their developments. Worse still, many consider setting a sales and marketing budget at the outset a waste of time and resource.
However, with interest rates continuing to fluctuate and the financial markets in turmoil, property buyers who are prepared to part with their cash are becoming a rare commodity. Developers must work harder and smarter to convince potential buyers to sign on the dotted line. And this despite demand for housing outstripping supply across the country, albeit in specific areas.
For large developers, engaging potential buyers through extensive marketing campaigns is run of the mill. But for smaller developers and builders, the hoops that they are expected to jump through to ensure a sale can often come as something of a shock. It’s best to be well prepared from the beginning and one of the first steps is to discuss and allocate an appropriate marketing and sales budget. United Bank London specialises in providing intelligent financing solutions for residential and commercial developers and has extensive experience of working with clients to promote sales.
“Our experience means that we are well placed to recommend appropriate and forward thinking marketing and sales agents,” explained Roger Tidyman of United Bank London. “More importantly, during the initial financing discussions, we can recommend the amount of marketing budget and the type of spend that we know will be necessary to enable sales. That way we know that the developers being financed by the bank will concentrate on sales and not just the building process.”
For many smaller developers, the emphasis of a project is on securing the right land or property, a planning permission and building out. However it is important to talk early to professionals about what product the local market is seeking, design your proposals to meet that demand and make the market aware that your product is coming so as to encourage interest and secure early expressions or even commitments to buy. Many developers simply do not allow enough time or a large enough budget for the marketing and selling their projects. It is this work and consideration which will become increasingly important in this hardening market.
“Small and medium sized builders have been able to get away with minimal marketing in recent years,” commented Roger Tidyman. “It has been a sellers’ market and much put up for sale has been snapped up quickly. Those days, particularly for over specified apartments are long gone. The right sort of housing supply may still be lacking but financial institutions have tightened their credit terms and increased pricing as a result of the recent financial crisis and more people cannot afford to buy and are concerned about their financial security – in short, they are becoming more risk averse.”
“ This unaffordability and risk aversion is starting to show in property sales. First time buyers in particular are finding it extremely difficult to enter the market which is slowing and reducing sales all the way up chains. Consequently properties are sticking. In such a hardening market builders and developers must pay more attention to planning and effecting a well thought through marketing and sales plan to movie their units ahead of the competition; it could be extremely costly if they don’t.”
