Property developers transforming businesses to beat rising costs

  • 24/06/2024
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Property developers transforming businesses to beat rising costs
Property developers are combatting rising costs, high interest rates and a challenging economic environment by rethinking many of their business practices.

Half of developers are using different materials to reduce costs, and the same number are exploring new areas and regions to build in. Again, almost half are planning to build new property types in order to diversify their developments, and 38% are considering investing in new technology.

According to the developers polled, many said they have pivoted to meet changing market demand, to expand their business or increase profit margin.

Other reasons given for change include sustainability, to improve Energy Performance Certificate (EPC) ratings, and to diversify portfolios and regulations.


Obstacles to hurdle

Thinking about key challenges over the past 12 months, developers cited rising costs of labour as their biggest concern, followed closely by rising mortgage rates, struggles raising finance, rising material costs and new regulations.

Terry Woodley, managing director of development finance at Shawbrook, said: “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.”


Shawbrook on the acquisition trail

Earlier in June, Shawbrook bought specialist motor finance lender JBR Auto Holdings, a super and luxury car financing provider.

The acquisition will broaden Shawbrook’s offering within the regulated motor finance sector and strengthen its commitment to provide finance to people in clearly defined markets.

Also in June, specialist lender Shawbrook made a trio of hires in its development finance team with Philip Kirkwood, Greg Pescott and Tom Edmunds.

Kirkwood will take on the role of senior relationship director in its development finance team.

Pescott and Edmunds will become relationship directors, overseeing the South West and Wales and the Midlands respectively.

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