Developers urged to narrow their focus

There is a clear need for property developers in South Africa to recognise market segmentation along demographic lines.

Gerhard Kotzé, CEO of the ERA South Africa property group, says there is a distinct international trend in this respect and local developers risk making their products less relevant if they fail to recognise it.

He says that while there is recognition of the first-time buyer segment and the so-called empty nesters, this is still more a matter of marketing rather than product orientation in SA.

"To a very large extent property is treated on a one-size-fits-all basis here, and this fails in many respects to meet the needs of more sophisticated, more discerning and more price conscious consumers, given the rapid rise of property prices and decreasing affordability."

In the US, he points out, there are a number of recognised market segments and developers tend to take these into account in bringing their products to the market place.

"Property is designed accordingly and pricing fits naturally into place, based on the sizes, nature of the accommodation, types of finishes, general characteristics and positioning of properties for these different segments.

"And while nobody suggests that there aren't cross-over developments where market segmentation blurs, careful targeting is playing an increasingly important part in ensuring the continued comparative health of the American property market.

"Now I believe there's a strong case for estate agents and developers to work more closely in South Africa and for both parties to assess on a more scientific basis what the market requires before embarking on new projects.

"This would go a long way towards leveling out the peaks and troughs in the market cycle and making it more stable."
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