Red-Hot Market Has Developers at a Crossroads

Favourable macro-economic factors and heightened market pressures are bringing developers to a crossroads when determining project feasibility.

In the wake of Covid-19, the Australian property market has seen positive demand, but snapping up current opportunities can be a delicate balancing act for developers and contractors, Construction Industry Solutions (COINS) business development manager Tim Hird said.

“Developers are at a crossroads; investment opportunities are solid yet evolving market trends are triggering complex planning pressures,” Hird said.

Industry confidence was further boosted with infrastructure investment at the forefront of the budget, as well as substantial incentives for first home buyers and older downsizers, and an extension of the construction commencement period for the HomeBuilder scheme announced in April.

Hird said while the outlook certainly remained positive for the property market, there was still a level of pandemic-induced uncertainty, particularly with international border restrictions impacting foreign investment and skilled labour resources.

“Throw housing affordability, social trends, exponential acceleration in technology and environmental obligations into the mix, and the property landscape is changing at a rapid rate of knots which can make assessing project feasibility more complicated,” he said.

“The current boom has been offset by rising material prices and a labour skills shortage.

“Our environmental conscious is mature but that comes with more regulations; there is demand for urbanisation yet also for a tree change—working from home is the new norm but the need for connectivity is greater than ever.

“Polarising factors are at play and that intensifies the pressure developers are facing when it comes to smart and sustainable design that addresses economic, social and environmental factors.

“Calculating investment viability becomes a lot more complex.”

According to Hird, the prudential risk developers are willing and able to take often comes down to adaptability and making informed decisions based on high quality data and forecasting.

“The more business processes you can digitise, integrate and streamline, and the more data you can capture and analyse, the more efficient and adaptable your organisation can be, particularly in arming itself against risk,” he said.

“A sophisticated, cloud-based ERP system that can handle the complex requirements specifically related to the property development market is becoming an increasingly important asset—I’d argue essential—in 2021.”

Construction Industry Solutions (COINS) software is designed specifically to manage all aspects of the property development, real estate investment and home building lifecycles.

Whether you contract out construction or manage the entire build-sales-aftercare process, COINS streamlines planning, forecasting, financials and project management in one system, arming business decision makers with the data they require to be competitive and resilient, Hird said.

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