New development marketing must be targeted: Mark Percy in conversation with Peter Chittenden

In my recent conversation with Mark Percy, executive manager of residential of CBUS Property, we explored some of the main issues confronting our sector. I was also very pleased to hear Mark express some refreshing thoughts across a range of ongoing topics impacting the housing market, as well as some timely points directly related to project marketing.

“In general I think that the marketing has kept pace but right now we are looking at a number of core trends and pressures where the impact of finance is central and where incentives have come into the market.  If we are talking about incentives, these can come in two forms, government incentives and private incentives from the developer,” says Mark.

According to Mark, reaching out to attract consumers via the use of incentives can and does produce mixed results but he is cautious about how they are used.

“Many of the government incentives that are introduced do distort the market.  We now have across Australia a patchwork of offers in various forms that vary from state to state.  It would be best, if incentives are available (such as reductions in stamp duty), they were offered across the board, more or less to all buyers evenly.

“Just stimulating one sector can potentially distort the overall market.  While one sector may benefit from the stimulus, it is likely that other market segments may be adversely affected.”

However, Mark believes that the developer should ideally not directly offer sales incentives – price is the main driver for a purchase decision.

“Price alone is far more transparent than developer rebates or giveaways that I believe buyers do not really trust.  Buyers do respond to price reductions that may be negotiated through the sales negotiation process.  It’s better to concentrate on getting right upfront the asking sales price, facilities proposed, quality and design of the project – these are the key factors to get concentrate on and then normally incentives will not be required.”

Mark did agree that existing facilities in an local area are key marketing elements, including those that are already established and in, some cases, those that are subsequently upgraded as a result of a new developments bringing more people to the area.

“Access to a range of local facilities that are not directly maintained by the owners corporation will appeal to buyers.  Reflecting on this, we have already seen the spread of 24-hour gymnasiums, as just one example, plus the spread of a new generation of ‘corner stores’ and take-away food outlets.  They to some degree reflect the needs of higher-density living.”

According to Mark, when a new project has easy and convenient access to a range of existing facilities, this is a clear marketing positive as the project does not need to accommodate or duplicate these facilities.  These facilities are available for use from the day of moving in.

Along with Mark, I would agree that apartment buyers will always look to access nearby services and facilities; however the supply of good quality in-fill sites is becoming limited.  They are becoming harder to find, in NSW there is much more land available in the outer suburbs and, as inner-city sites dry up, there will be a challenge to match buyer expectations.

“I think that while the balance of local facilities may not always be perfect, as a developer, CBUS Property needs to carefully look at what core facilities we must provide to match market expectations, no matter how specific or difficult they might be to provide.”

“For example at The Residences in Sydney (where our role was a financial one), apartments in the development, which are at high-end of the market, a wine room was provided where each apartment owner could store their wine in a dedicated individual lock-up storage area.

“This was a very specific marketing exercise, with each apartment having access to their own store for at least 100 bottles in a fully climate-controlled environment – it was very well received.  It’s similar to the garden example I spoke about earlier and, again, shows the importance of knowing what facilities your target market will value.”

Peter Chittenden is managing director for residential of Colliers International.