Will 2023 be a Good Year for Property Developers?

Posted by The Landsite on 8th February 2023 -

The global slowdown has forced businesses everywhere to re-evaluate their strategy plans over the coming year.  Property developers who have the ability and are willing to adapt to the current market conditions can turn 2023 into the year in which to grow their property development business. There are several factors to take into consideration:

The cost of land

The price of land has skyrocketed in recent years and is a constant challenge for property developers.  The cost of acquiring land has been higher than the target potential returns from the development.  This cost alongside a lack of suitable land and a lack of clarity over planning regulations has forced many developers to back away from closing on land purchase agreements.

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Building and construction costs

The rising costs of building and construction materials in addition to supply shortages has left many developers with no option but to scale back development plans to reduce costs. 

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Market conditions

As the economy slows, there are signs that a correction in property and land value is underway.  Uncertainty in the UK real estate market has left many landowners keen to liquidate their assets creating an opportunity for developers to re-negotiate on sites previously financially unviable.

How much a site is worth

A useful strategy for property developers looking for development land is to assess and calculate a residual land value to avoid overpaying, ensuring you get the best deal possible.

Know your market

Despite the economic crisis, there are some markets less likely to be affected by a downturn.  HMO’s, affordable housing, and student accommodation all tend to fair well.  The luxury housing market in many cases is also resilient to slower market conditions and hold their value. 

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To conclude, a slower market can be the right time for property developers to take advantage of the opportunities available in 2023 such as: 

• Focus on niche markets.
• Target property opportunities less likely to be affected by the economic slowdown. 
• Research residual land values prior to securing a site purchase.  

By taking a longer-term view of the real estate market and with careful strategic planning, developers can weather out the storm and come out stronger than before.

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