In the last 10-15 years off plan sales of new build property in the UK have gone mainstream. Previously limited to investors speculating on the property market, it is now common for UK-based buyers to purchase in unfinished schemes. Help-to-Buy has also contributed to this trend.
In order to sell units on developments that don’t exist yet, developers have come to rely on sophisticated marketing technology.
A whole cottage industry of computer generated imagery, fly-throughs and animated architectural models now exists to help buyers bridge the gap between what doesn’t exist now and what will in the future. Elaborate marketing suites and glossy brochures do all the heavy lifting when it comes to selling.
Off Plan Sales Before 2016:
Partly because of this technology, strong demand and rising capital values, developers have become accustomed to selling a good proportion of units well in advance of completion. Before 2016, developers could expect to sell 40% of the units before the show home was ready to view. Some developers’ business model is predicated on not breaking ground at all until 50% of the units sell off plan.
The Threat of Uncertainty:
But political and economic uncertainty has stalled the property market in London and the South East, meaning buyers for early off plan sales are increasingly rare. So, is it now worthwhile building an expensive, technology-driven marketing strategy? Or has the painful progress of Brexit has put the brakes on the London property market?
There are really only two reasons why people buy off plan: first that they will receive a discount and rising capital values will swell that investment further; and second, the property on offer represents a ‘once-in-a-lifetime’ opportunity that they could miss if they wait until the building is completed.
I think it is fair to say that most new build property does not fall in to the ‘once-in-a-lifetime’ category! This is a moniker I would reserve for buildings like the Old War Office in Whitehall.
The Next Five Years:
Since most new build property is unremarkable in both construction and location, it stands to reason that developers will have to accept that few sales will occur off plan until some prospect of capital growth returns. None of the big property consultancies are predicting this to happen soon – Savills believe that London property will bear the brunt of Brexit angst and over the next five years growth is predicted to be a measly 4.5%.
This kind of capital growth is nowhere near attractive enough to warrant mainstream buyers taking the risk of buying off plan with little prospect of reward to compensate for that. In addition, most investors have already abandoned the UK market thanks to changes in both SDLT and capital gains tax. This means that buyers who are serious about buying in the current market conditions really need somewhere to live. Waiting for two years to move in just won’t work!
What is your Irresistible Offer?
So where does this leave the developers who desperately need to secure sales in the next quarter? How can buyers be persuaded to buy before March 29th? To answer this question, we need to return to the second reason that buyers commit to off plan purchases – the ‘once-in-a-lifetime’ opportunity, or what marketing guru Tony Robbins calls the ‘irresistible offer’. That irresistible offer could be a discount or more favourable terms. The route that Residential Edge recommends, however is devising a compelling brand that lights up buyers’ imaginations. What does that mean in real terms? It means creating great stories that animate the bricks and mortar for sale.
So What Next?
Developers cannot afford to be generic in this market. So many new build properties require an urgent injection of personality.
Now is the time for brave use of colour in the show home, for creative and innovative thinking on the post-sale service vision. Now is the time to create an exciting proposition that will get your buyers off the fence and it to their lawyers’ offices.
Buyers should feel that if they don’t purchase now, they will miss out an irresistible offer. Sophisticated technology alone won’t work. But a compelling story of a development with a heart just might. The question developers need to ask is ‘What am I offering in return for my customers’ great leap of faith?’ And,
‘What is my irresistible offer that will encourage them to take this leap?
If you need help with developing a proposition that is interesting, compelling and personality-driven, contact me on firstname.lastname@example.org. For some specific ideas about how landscaping can help with sales at your development, take a look at this blog post here.