The media is now full of property ‘doom and gloom’ – property repossessions and arrears are up and property costs are down … it’s almost as though the ‘sky is going to fall’! This scenario has seen many property developers, and real estate investors generally, leave the market – and for those considering starting out in property development, these are scary times indeed.
What sounds like the worst time to get into property development can, in fact, be the ideal time. Successful property developers now realize that they can use the time to their advantage – their property development jobs will typically not be prepared for sale or lease for 2 to 4 years from the beginning.
So if they’ve bought well, they are less likely to be influenced by the financial situation at the time of buying their property development website.
In actuality, a poor market is a real estate developer’s heaven, because a poor market is a buyer’s market, and among the first measures to any property development project is securing a viable property development website on the best possible conditions.
Though we are aware that the real estate development business is real, and lots of areas of the world are in a real estate recession, we also know from history that educated property developers are successful in any market – decreasing, flat or rising.
We’re working towards that which we think the economic situation will be in 12 to 36 weeks time. Really we ourselves are still busy on the market – seeking Council permission for any range of property development projects. This gives us the chance to act quickly and construct our approved property development projects once the market does become buoyant.
It’s our opinion that the next market signs are some of the key factors which will lead to improved future opportunities, particularly for property developers:
The pent-up demand for the home. In March 2008 leading Australian economics forecaster, BIS Shrapnel chief economist Dr. Frank Gelber contended that housing costs across Australia increase by 30% to 40% during the next five years due to the built-up shortages of home.
The present Federal Government has said that they will work towards raising Housing Affordability and have started to announce incentives such as Tax Credits of $6000 annually if the housing is leased at 20% below market lease.
We believe that an increasing number of individuals, in the short to medium term, will likely need the rental accommodation that we intend to construct. This is because of either their fiscal stress (cannot afford to buy a home) or demographic tendencies (like Gen-Ys who are less inclined to purchase Real Estate).
Even if our ‘crystal ball’ is wrong, we all know we have the tools to maintain property development sites during potential further market changes to come, and raising rents are definitely helping with that!