"Property Developers'' Everywhere - What is going on?
In recent years, in the course of my business dealings and interactions with the broader industry, I have came across many people who claim to be “property developers“. Someone who buys a suburban piece of land, hires an architect to get a permit and appoints a builder to complete the design and construction can all of a sudden call themselves a property developer. Worst of all, someone who has never built anything, and only trades land as a business for a profit through various on-paper value adding methods (such as getting a planning permit, or simply buying/selling at the right time, quite often manipulating tax loopholes, and with no effort or value add in the interim!) will also call themselves property developers! How many of us have seen “property developers“ only focus on low quality “standard“ townhouses being built over and over again at different locations and exactly the same cost and specifications.
I find this quite intriguing and somewhat disrespectful to those who have labored the property storms for decades, as one would not simply call themselves a “doctor“ or a “lawyer“ without first having gone through the necessary basic education, gained sufficient experience and very often, pass external examinations and achieved professional accreditation. Unfortunately, there is no such profession as a “chartered“ property developer.
So what is property development really as a profession? Just as someone who runs calls themselves a restauranteur, must have some experience of cooking, hospitality, customer service, management of staff, appreciate the profit and loss drivers of the business. Otherwise, anyone who has cooked or boiled a pot of water can call themselves a restauranteur! Similarly, in the property industry, whilst we are not producing food on a plate, we are producing buildings and homes.
The process of producing a building is multi-faceted – from a thorough understanding of planning, design, construction, marketing and property management. Whilst one relies on outsourced professionals to undertake these functions, one will still need to lead and drive the whole project every day – it is not a matter of simply hiring the best teams and hoping things will fall into place.
I believe that basic instinct and gut feel is what differentiates successful developers from novice ones, regardless of whether you are the best engineer, architect, most experienced builder or most seasoned marketing professional. Those who have a natural eye for real estate – those who can see inherent value and the possibilities in a piece of land in the context of its location and surroundings and through a detailed understanding of the culture and lifestyle habits of its end users. Those who have their personal conviction and point of view, and not be easily misled or guided by others. Those who are able to visualise the final outcome and own the vision of the development at the very outset and drive this vision to completion. Developers are always forward looking and use past experience as a guidance – each and every project is unique in itself. They feel the broader economic conditions themselves and appreciate what will or will not work – believing that there are successful projects in any market condition. They have a very sharp eye of the numbers of a project and are able to quickly focus on and take real actions to mitigate the risks of a project. Finally, as with any business venture in the world, believing that luck also plays a part in a successful project and your next project may not be as lucky as this one! There is no “recipe“ for success in this industry. To be a successful property developer, you must be an optimist but a practical realist –knowing when to start AND stop will enable you to ride the broad economic cycles.
What do you think?