Never underestimate the advice that an estate agency can give a property developer

Very often, says Rowan Alexander, Director of Alexander Swart Property, the most valuable service an estate agent can perform is not simply to find the right house for a buyer or get fair price for a seller but, rather, to advise a developer on how the market is moving and what today’s (or, more often, tomorrow’s) buyer will be looking for.

“Again, and again one hears the statement “market change is inevitable” but when asked to be specific about what conditions are likely to prevail a year or more from now very few estate agents can give a well-researched authoritative answer,” says Alexander. “The great advantage of being in a position like mine, in contact with several developers at any one time and with over 25 agents providing daily feedback, is that it does give one a chance to understand the market and see where it is heading. One can pick up trends and patterns and this information, if conscientiously processed and evaluated, can make or break a developer.”

The really disastrous attitude for a developer to adopt, says Alexander, is to assume what worked brilliantly last year or at some previous stage will be just as successful next year or later.

“With  our experience of marketing new projects over many years we are able to identify in advance how consumers attitudes will have changed by the time the project comes on stream.” This advice, says Alexander, is especially pertinent when the developer is moving into what was formerly agricultural land which is still without a service infrastructure.

“Many developers prefer to focus on replacement or upgrade projects in established areas because the services are already there, planning approval can be quickly obtained and the operation can be a quick in- and- out one on a relatively short time scale.”

However, in Cape Town (and elsewhere) on rezoned agricultural land the municipality can often give no guaranteed completion or handover dates for their services and getting planning permission may take months even years. One has to be very closely in touch with the market to be able to advise a developer on such a long term projects.”

Alexander added that other factors influencing new developments in Cape Town now are the waning buying power of South Africa’s middle class (a direct result of the poor performance of the economy), the increase in VAT, the slow- down in rental demand and the recent slowdown in “migration” from other provinces. Political insecurity and dissensions in the DA have also, he said, not helped.

However, he says, Alexander Swart Property’s proven trend indication skills (honed over many years of liaison with developers) still puts them in a good position to advise developers on where future opportunities lay – and, he adds, “there very definitely are good opportunities still out there”. One example of good liaison with a developer, he says, has been the recent release of Fountain Views, the 61-apartment Brick n Board new development in Brackenfell. Three weeks after the launch Alexander Swart Property are now 75% sold out and are likely to be fully sold out by October 2018.

“This shows that if developers are helped to identify the right product (in this case 60m², two bedroom units selling from R1145000) they can even in today’s less optimistic market still be very successful indeed – and there are many other similar opportunities awaiting exploitation out there right now.”