24 July 2008, City A.M.
By Jessie Hewitson
AS THE MARKET GETS TOUGH, AGENTS ARE ENTICING BUYERS WITH GOODIES.
Throwing in a free Mercedes with the sale of a luxury penthouse is nothing new, but it is getting more common. Against the backdrop of a rapidly weakening market, developers are having to work harder than ever to sell – often resorting to incentives that if it took place in the City might raise eyebrows.
At the high end, even Candy & Candy, the developers behind luxury property One Hyde Park, have delayed marketing and selling their latest project, the Grosvenor Waterside.
They had the launch party, but then put the whole thing on hold. The main reason was that they weren’t confident they would achieve the prices they wanted – and didn’t want to be seen reducing prices.
It’s for just this reason that developers are increasingly offering sweeteners to encourage buyers to get out their chequebooks.
Incentives of this kind include booking a celebrity chef to cater the launch party and offering to stock the wine cellars before buyers move in – or throwing in a free Bose home entertainment system or holiday with each sale.
“It used to be much more common in the commercial market, but now it’s happening a lot more in the residential market too,” says buying agent Robert Bailey. “The days are long gone when developers would sell 90 per cent of their properties on the first day and 10 per cent on the second, so now they are having to use every trick in their marketing book.”
It’s not only a question of hooking buyers, either. As Bailey adds, “Developers are having to work harder just to attract estate agents to their launches, too. Unless a developer does something lavish the agents will see the development in their own time, and the property sits around and doesn’t get sold.
“I’ve been to launches where we’ve been given Thomas Pink shirts, iPods and John Lewis vouchers. As for the buyers, I’ve heard of developers throwing in reduced mortgages, holidays and cars to incentivise people to buy.”
A house in Clapham being sold by Savills estate agency is a good example: the developer hired chef Tom Aikens to cook for the launch. Another development Savills is selling in St James’s – for £8.85 million – saw a champagne-fuelled launch party.
“The developers in question, Manhattan, are known for throwing lavish parties, so they always get a good turnout,” says Charles Lloyds, of the Sloane Street office. It seems that it works, too. “The launch for this flat saw 110 agents in attendance,” Lloyds says.
BUBBLES AND NIBBLES
But will it be enough? It seems that even the promise of champagne and Michelin-starred nibbles isn’t always enough to tempt agents to a launch. It’s not yet full-on panic, but it’s not that far off. Developers are leveraged up to the hilt, and have obligations to the banks.
Which means that there are opportunities for brave investors, especially ones who are willing to sink their cash into new-build.
“We are starting to get calls from agents on behalf of developers offering bulk deals,” says Camilla Dell, of Black Brick buying agency. “Developers are needing to ‘de-risk’, and this means selling off-plan in bulk.”
If there’s a car thrown in, who can argue?