Beware the inexperienced developer
The last 24 months have shown conclusively which Cape property developers are really professional and which have had too little management and business experience and therefore lack the skills to be developers in more competitive times.
The tough conditions have also shown that there is a wide variety of ethical standards among developers as regards the quality of their projects, whom they employ and how and when they pay their selling agent.
These comments were made by Mike Greeff, Chief Executive of Greeff Properties, a company which has handled new development marketing for some six years.
Praising such firms as Warner Projects, The Leisure Group, DNL, Atterbury, Michael Grant Developments and certain others, Greeff said that they had shown how to cost and control their projects in such a way that they ended close to the agreed completion dates. These developments, he said, are also completed without long lists of snags and with all the contactors and agents paid on time.
Such firms usually worked with reputable, proven contractors and hired good project management professionals and they appreciated the efforts of their estate agents out there in the front line ensuring that their projects are sold and transferred.
By contrast, said Greeff, the Johnny-come-lately brigade, sometimes in development for the first time in their lives, have all too often finished projects 18 to 36 months late and then still had an unending list of problems to deal with (some of which in many cases are never rectified). In certain cases their projects have never been finished and in one or two instances are in the process of being liquidated, leaving the investors and owners to sort out all the problems themselves.
This type of developer, said Greeff, is inclined to regard the agents function as peripheral and to conveniently forget to pay the money owed to them and other parties involved. Repeated promises to pay are often made but seldom honoured. Agencies like his own, said Greeff, have ended up with hundreds of thousands of rands worth of agents fees still owing from such inexperienced developers. Fortunately the present economic cycle has made sure these developers disappearing and this he believes will be a blessing in the long run, for investors, owners and estate agents alike.
What makes the situation particularly frustrating, said Greeff is that, it is the agent who in almost every case has to bear the brunt of the criticisms about poor performing developers. The customer never gets the chance to deal one-on-one with the developers themselves as these developers avoid any involvement with their clients.
Certainly, said Greeff, when better times return in the next two to three years and developments start coming off the drawing boards once again, and with other agencies will know which companies to avoid. Let us hope that they do not have the effrontery to set up in business again without making a real effort to first to settle their debts and/or compensate owners for work that they have had to complete at their own cost.
Article by: www.greeff.co.za