Developers: How can you stay competitive in Singapore?
Developers: How can you stay competitive in Singapore?
It‘s time to do a rethink, according to a South East Asia Property Awards (Singapore) judge
By Benedict Lim
Developers have to contend with many challenges within the local residential development landscape as a confluence of factors funnel towards a most unprofitable situation of modest demand in the face of a supply glut.
The overhanging anti-speculative measures put in place by the authorities to prevent runaway asset inflation caused by cheap and abundant liquidity is continuing to dampen purchasing interests. As a consequence, property prices are starting to slide and unsold inventory continues to build.
Developers will need to behave and think like the modern age technological entrepreneurs and develop solutions to drive property buyer’s imagination and aspiration. Built up private residences are now predictable with a fancy property name and a full inventory of club amenities which comprise of usual suspects of swimming pool, barbeque pits, gymnasiums and other public features. The innovation of bringing a social club amenities to the residential domain is no longer a value-add feature but a required minimum specification to any private condominium buyer.
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So how can developers compete in this increasingly crowded space which is insulated from economic dictate?
Home purchases obviously don’t come to a standstill even when the economy is challenged. It is also an industry fact that demand in good or bad times is increasingly discerning.
This is especially so in a landlocked country in which the economic performance can only be sustained with resident and migrant population growth given the increasingly aging demographic. Demand for homes will always exist, but developers must now differentiate and create communities with identities.
Sell a lifestyle
If we observe how condominiums evolve, it has always been about providing an aspirational lifestyle to a growing population with increasing purchasing power.
In the early days, having a country club or social club was an aspiration to purveyors of wealth. The advent of the private condominium brought this lifestyle distinction to the home buyer and created a residential asset class opportunity which remained popular especially for the public housing upgraders. Bringing the clubhouse to the doorstep was a great thing in the past and developers have started to churn out very similar products albeit in different locations and under different names.
With increasing land prices, developers have forced a specification standards of smaller living spaces to ensure an equilibrium price for healthy take-up. So have developers given consumers less for more or really more for less? It is time to do a rethink.
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Understand your residents
Millennials are idealist in nature. Providing a mere bricks and mortar inventory is no longer going to capture excitement or demand. The creation of community and activities which are not available online will drive interest. Developers must think hard about existing property management approach and evolve it towards a more club management approach.
Continually seeking new innovations involving brand names would be beneficial, especially for gymnasiums and other facilities.
Generation-X typically have families with grown up or growing kids. Busy working parents will always be grateful for things that make life easier.
Be convenient
Homecare and delivery logistics are key to this.
Having good help is something of a lottery outcome. If a private residence can provide domestic support, such as cleaning and laundry, this can act as a big draw.
After all, what owner doesn’t want to come back to a perfectly cared home?
Online shopping has created a new phenomenon of delivery couriers making drops at all times of the day. This can be inconvenient as homeowners need to be there to sign for packages. If a building can assist in this process and receive shipping goods on behalf of residents – either delivering it to doorstep or have the residents pick this up from a service desk.
Added extras
Exclusive activities for residents will be the next level of value-add uplift for private residences.
This would be enrichment classes for the young, practice examinations for the students, mahjong sessions for the old, outings to unique destinations, yoga or Zumba classes and other activities to engage participation from residents.
In other words, bringing the social and recreation club to the residence.
Looks matter
Sense of place and pride of ownership will continue to drive buying imagination.
Good design and architecture are absolutely necessary for true luxury. The use of quality material and the mindful design that allows practicality of convenience and effectiveness are important.
Developers need to be wary that confusing lower cost for value in material selection would lead to incremental chips to their reputation when the material fails to age well.
The other aspect is that developers should sustain that residence brand by staying connected and not just leaving it to the fate of the management to sustain the initial aspiration of quality environment and care.
Developers can continue to thrive even in economic downturns if they can provide a meaningful environment and something different in with their product by being relevant to their customers.
What is clear is that buying land and building on will no longer give any developer the automatic right to success.
About the author:
Benedict Lim is a Partner & Principal with EY. He is the ASEAN Real Estate Leader and Managing Director for EY Corporate Finance Pte Ltd. He drives thought leadership in real estate and advises clients on investor/owner/occupier strategy, transaction management and asset management. He has more than 20 years’ experience in the real estate industry in various senior management roles in master development, real estate fund management, asset management, portfolio management and development. He is a trained international arbitrator with qualifications in MBA, MSc Real Estate and BEngineering in Civil and Structural Engineering. Lim is also a member of the judging panel of the South East Asia Property Awards (Singapore) 2016.
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Source: Property Report