Three Top Tips from an SME Property Developer: Finding the Correct Site
There’s no hiding from the current state of the housing and property development market at present. According to RICS, national prices and enquiries are down from pre-referendum levels, most particularly in London and the South-East of England. Build-costs are continuing to rise due to the uncertainty of labour and increasing costs of material imports, as well as the fact that landowners generally believe their properties and sites are worth the same, if not more than in 2016. All these factors combined make for a tough property development environment. The need for a developer to buy well and ensure they’re developing the correct site is imperative to a project’s success.
1) Branding, network and presence One of the biggest issues that developers are facing is to find land opportunities and development sites that stack up correctly. SME developers are not all fortunate enough to have in-house land and development teams whose sole job is to curate a pipeline of potential opportunities. With this in mind, we have found that as our branding and network has grown, we are attracting more good quality sites being presented to us from credible land agents and sourcers. The ideal scenario is to build relations with land agents who source sites directly from landowners and deliver these opportunities to you in a truly off-market capacity.
2) Do not manipulate numbers to make deals work Once a site has been recognised as being a potential deal, the next step is to run a full development appraisal. We ensure any developments we choose to pursue meet a minimum profit margin. Often, it’s easy to “increase” the profit margin by inflating sales values and decreasing build costs etc. to achieve the required margin – manipulating the numbers in this fashion could lead to the ultimate downfall of a project later down the line.
3) Patience and perseverance Finding, acquiring and delivering the correct project is a time-consuming process. There are plenty of “(non) deals” out there that do not work or stack up correctly. After reviewing many of these, it’s easy to decide to take a gamble on one that “could work” if everything goes entirely to plan. Rather than starting the wrong deal on the back-foot, our view is to remain patient. Finding sites is very much a numbers game, and often many sites are appraised before finding the diamonds in the rough.
About Flamingo Investment Group is a boutique real estate group specialising in property developments in and around London and the United Kingdom, with particular importance on delivering high-quality, contemporary, and chic designed homes.