Property development has seen a few challenging years in terms of market stability and growth. The global economic slowdown that began with the pandemic lockdown in March 2020 has put a lot of property developers’ plans on the back burner. On the surface, 2023 may not seem like it will be a great year for property development, due to the fact the world is still recovering from global economic delay and the cost of living crisis. Property development is subtly changing this year – but how is it changing, and what can you do to get ahead of the curve?
Cost of Land
One of the things you need to consider about property development in 2023 is how significantly the cost of land has risen. It is one of the common issues for property developers in recent years. In many cases, property developers have found that the cost of land would be higher than any potential return on investment. Although a lot of things are changing within property development, this is proving to be a consistent problem. The Government is recently discussing ways to alleviate this problem, however, this shows no signs of changing this year.
The cost of living crisis doesn’t just apply to everyday household items and food – it is also happening when it comes to construction material costs and labour. There has been a huge supply shortage – in recent years, many developers have scaled back construction and development plans. However, recent research has revealed that construction costs have reached their peak, and have begun to plateau and stay relatively flat. This could mean that it will become easier to develop property this year, which could show that tides are changing in a positive direction for property development in 2023.
When the property market is in full swing, you take less of a risk when you develop a property. However, due to the cost of living crisis, fewer people are looking to buy homes, and the cost of homes is at an all-time high. The economy is slowing down, which is usually not great in terms of financial investments and planning. However, many financial commentators think that there will be an opportunity for a re-evaluation of property and land value. This could allow you to negotiate favourable prices for land that has been previously unavailable. It could also mean that more people re-enter the property market, making your property development venture much more likely to be profitable. Economic factors may actually end up being positive for property development, and we could see this change the market very quickly within 2023.
Know Your Market
One of the most essential parts of making a good profit on your property development portfolio is knowing the market inside and out. There are some markets that will be less affected by an economic downturn, and investing in these markets could be one of the best ways you can secure your financial downturn. Affordable housing, student property and the luxury housing market all tend to survive hard economic times.
Are you thinking of investing your property development efforts in these lucrative markets? Here is everything you need to know about the common needs of these recession-resilient markets.
Luxury housing options always tend to survive bad economic times, as they are usually bought by people that have a lot of money to spare. However, you will need to use strategic planning and buy land in the right areas in order for this to be lucrative. Marketing and displaying luxury homes can also be somewhat difficult, as you should invest in targeting the right people. Consulting marketing experts can help you find the right potential buyers for luxury housing.
The push for sustainability is now affecting all walks of life. Many property development commentators are now saying that hopping onto the green living trend could be very lucrative in the future, as a larger percentage of the market is now requesting ‘eco-friendly’ homes. Using recycled materials, installing solar panels, improving the property’s energy efficiency and carbon offsetting production are all crucial when it comes to creating ‘green homes.’ Some commentators have predicted that non-green homes may be significantly less desirable in the future – keep this in mind when you’re developing future property. Good property development pays attention to housing trends and adequately plans for the future – make sure you take this into consideration.
Student housing has always been very lucrative, however, it is also very recession resilient. It is one of the best options for property development, as it often has higher and longer returns, and is always in strong demand. When you’re developing student property, there are many things you should consider. Designing space that has plenty of storage (such as under-the-bed storage for duvet cover sets and above-wardrobe space for clothing) will be a big draw for students. Including great facilities such as a gym or a cinema room can also be a huge positive for potential student customers – you should always be thinking of ways you can differentiate your student property from other options on the market. This way, you will be able to find your target market and have lucrative returns.
Is Property Development Changing in 2023?
Although the property development market has been stagnant for quite a few years due to a global shutdown, there are signs that the market is beginning to heal. By keeping an eye on current trends, resilient markets and changes in price, you will be able to find a property development niche that could potentially generate success. If you keep your eye on the market, you will better be able to predict market changes and signs of stagnation, allowing you to plan for the future.
There are signs that property development will change in 2023 – keep your eye on the market to protect your property development portfolio.