Developers and Agents need to get closer on new developments

Developers and estate agents should work more closely together to prevent incorrect market positioning of new property developments as buyer sentiment changes.

Gerhard Kotzé, CEO of the ERA South Africa agency group, says there is an urgent need now to accurately track market trends and to develop projects with ready acceptance among buyers, taking into account current demographic, social and financial issues.

"Typically, in a strong property phase, virtually anything brought to the market place sells," he notes. "However, in the later phases of a property boom such as we are still experiencing, property does become less affordable and buyers do become more wary.

"At this stage we are certainly seeing more selective buying and greater awareness among buyers of the need to avoid over-extending themselves in their borrowing on investment homes or, for that matter, primary homes.
"On the other hand, we see that developers have perhaps been over-optimistic about the market and have continued to bring out developments priced at the upper end of what is currently affordable for the majority of buyers."

This is not to suggest, he says, that well-planned and executed developments will fail to find buyers, although it may take somewhat longer than last year to do so.

"But what we do think is that developers should now be planning projects that focus on the lower to middle-income sectors of the market, where demand is still extremely robust due to a large extent to the emerging middle class.

"We also believe estate agents should be drawn into the development process at an early stage to ensure the marketability of a given development. After all they are in touch with market sentiment daily and are well-positioned to advise developers in this respect.

"In short, developers should cease to conceptualise and plan in isolation of estate agents' input. At the end of the day, the agents have to sell, developers have to make money and buyers need to be housed affordably. Co-operative planning is the key."

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