The UK housing market fared surprisingly well in 2020, despite a global pandemic and the onset of a recession. House sales and prices soared after the first lockdown ended in May and the market remained buoyant for the rest of the year.
However, many of the biggest housebuilders closed their construction sites for months to keep employees safe, causing delays in countless development projects. As an increasing number of businesses close their doors for good and unemployment levels rise, the country is set to plunge deeper into recession in 2021.
So, how can property developers ride out the storm and continue to grow their business despite the uncertain economic outlook?
Keep Your Finger on the Pulse
It may sound obvious, but keeping up-to-date with industry trends, market health, and changes in government guidelines and legislation is imperative to stay ahead of the curve.
Like any business owner, developers must adopt agile ways of working to adapt to change quickly. Subscribe to industry publications, tune in to podcasts by industry experts and develop your network of contacts using online forums and social media. Events may be a no-no, but developers can continue to build their network of contacts remotely throughout periods of lockdown and work delays. Be the first to know of changes afoot, adapt your strategy and targets accordingly, and have a healthy list of contacts who can help keep your development plans on track.
Focus on the Short-Term
The current climate of uncertainty and constant change makes long-term planning challenging. However, successful property development requires planning months and years ahead, and this won’t change because of COVID.
One of the key differences between developers who thrive year after year and those that disappear at the first hint of trouble is the ability to make contingency plans and quickly adapt to overcome challenges as they arise.
In this regard, developers are in a better position than they could be. When supply chains suddenly break due to unexpected economic or political events in this country or abroad, business owners are caught off guard and must act quickly. The pandemic is making life hard for many businesses, but after a year of tumult, there is a degree of predictability about the uncertainty ahead — developers know to expect the unexpected and to prepare for it.
By keeping operational costs as low as possible, for example, by reducing staff, and recouping money where possible (e.g. selling off stock and changing how funds are invested), property developers can shield themselves from the worst impact of a downturn in business.
Offer Your Customers More
How can you stand out from the competition? What services do you currently offer customers? Is there anything missing? When a recession hits and the pool of potential customers shrinks, property developers must go the extra mile to attract new customers.
Create a unique selling proposition that will help you to win a larger share of the diminishing market. This might include upping the ante with your marketing materials and sales techniques by embracing advanced technologies such as artificial intelligence (AI) and virtual reality (VR). Envisioning a home that has yet to be built can be difficult for a potential buyer and a hard sell for you, the developer. VR allows your customers to “walk through” their new home and get a feel for what it would be like living there.
Perhaps you can give the customer experience a boost by offering a wraparound service that makes it easier and more appealing for someone to buy from you, for example, by offering a part-exchange scheme. Not all developers provide this service and it’s a great way of helping people sell their existing homes fast so that they can purchase one of your properties. It’s a win: win situation for you and the customer.
Look After Your Staff
A business’s people are its greatest asset. You may have to make some difficult staffing decisions to keep costs down, but taking the time to keep people informed and provide support will pay off in the long run.
A recession is a stressful and worrying time for businesses and their employees. Effective performance management is essential to ensure that people don’t feel in-the-dark about what’s going on and that the workloads of remaining staff don’t get out of hand if cuts are made.
And don’t forget to recognise achievements and provide opportunities for development — these may seem like “nice-to-haves” when times are tough, but a motivated, engaged workforce is a higher-performing, more productive one.
The year ahead looks set to be a challenging one for property developers, but those who take the time to review their current offer, develop new ways of working and offer their customers a first-class experience can thrive and grow in 2021.