Property developers change tack in response to challenging market

  • 26th June 2024
  • 49% are using or planning to use different materials to reduce costs
  • 31% are making changes to meet market demand
  • 26% are concerned about rising costs

Property developers have faced continued uncertainty, stemming from rising costs, high interest rates, and a challenging economic environment.

However, despite tough conditions, nearly every developer has managed to change tact and diversify their strategy.

Half (49%) of developers are turning towards using different materials to reduce costs, and the same number are exploring new areas and regions to build in. 48% are also planning to build new property types in order to diversify their developments, and 38% are planning to invest in new technology, according to newly-released research from Shawbrook’s development finance team.

When asked why they are changing their strategies, nearly a third (31%) of developers are doing so to meet current demand in the market; 29% are making changes to expand their business; and the same number are altering their strategies to improve profit margins.

Thinking about key challenges over the next 12 months, developers cited rising costs as their biggest concern (26%); followed closely by rising mortgage rates (25%); and rising material costs.

Why are developers changing their strategies?


Key concerns/challenges over the past 12 months

Terry Woodley, managing director of development finance at Shawbrook, said of the findings: “Developers have faced an array of challenges and continued market turbulence over the past year.

“However, our research shows that developers have remained agile and resilient and have implemented changes to navigate their businesses through recent uncertainty.

“The fact that a strong proportion of developers are planning to expand their businesses should provide cause for optimism, and the adaptability already displayed will be key to diversifying income streams and ensuring strategies are robust for the year ahead.

“Given that developers listed access to funding as a concern, now could be an opportune time to partner with a specialist lender who can offer expertise, support and flexibility throughout a development process.”

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