Hold off on the marketing! It has been a long time since I said these words to GPS borrowers. The last couple of years have seen some trying conditions with developers having to put in a lot of effort to sell product.
Borrowers are now reporting increased sales levels and a concern that they are underselling. Where they have struggled to achieve pre-sales, they are finding that the sale rates improve dramatically once construction has commenced.
They are approaching GPS to make sure that we are comfortable with them slowing down the marketing of their projects.
GPS works with our borrowers as part of the team. We know that once construction has commenced, we are committed to the completion of the project. We also want our borrowers to have successful projects. Successful developers continue in the industry and, hopefully, will be repeat borrowers.
We know investors like proven, repeat borrowers.
The team at GPS and I are now having discussions with borrowers about the timing of their sales campaigns, price growth etc. These are more pleasant conversations than simply nagging borrowers to get them sold.
GPS has extensive knowledge of the residential development market in South East Queensland. As an example, we know from experience that there are very conservative areas within South East Queensland where achieving pre-construction pre-sales is nearly impossible, but that sales will flow once construction has commenced.
In those areas, having a false start by not achieving bank level pre-sales will prejudice the ongoing marketing and potential price uplift for the project.
We enjoy being able to share this knowledge and experience with our borrowers, and our investors appreciate the hands on knowledge we have of every GPS project.
Richard Woodhead | Managing Director