“Build to order”, the developers’ new business model

“Build to order”, the developers’ new business model

Posted on February 13, 2009 in 3plus1, Australia, Built Complete, Buying, Educational blog, International, News, Off Plan, Property, Property Club, South Africa, Strategy, UK

Brett Alegre-Wood

Hey guys,

Over the past few weeks I have been meeting and lunching with various developers around the country and without exception every one of them has firstly made it clear that their stock is running low but also that they would not be building in the same way as they have one in the past. That is building out a whole development and relying on the sales to be made before completion.

The major change in business strategy is called “Building to Order” – this simply means that the only way they will start building a property is once they have an exchange in place. Obviously the more demand for property the quicker they will build the property.

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For smaller developers this will mean that there may be some time between exchange and completion as they will want most if not all of the site sold prior to commencing the build.

For larger developments the developers will build out a couple of show houses but then will only continue once they have an exchange in place. This way it will spread out the completions and mean lettings on your property will be easier.

This ‘Build to order’ strategy also means a couple of things, by limiting the supply in this way it will cause prices to rise as they supply side of property lags behind demand. It will also mean that the natural market forces will only allow property to be build as and when the demand is there which is limit the amount of oversupply in a given area or development.

The good news for us as investors is that developers are beginning to start their new build programs and that this will create many off plan opportunities.

I am in the process of creating a guide to Off Plan property which should be out in the next couple of weeks. In the meantime if you have any questions or want to take advantage of the presnt opportunities call the team on 0207 812 1255.

Live with passion,

Brett Alegre-Wood

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