PROPERTY DEVELOPMENT: Property's Long Road Ahead
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Although the worst effects of the recession are now tailing off, property development and construction companies still have a long hard road to walk before anything like “normal” trading conditions are seen again, says Paul Henry, Managing Director of Rawson Developers and Rawson Construction.
“It would shock many people,” said Henry, “to know just how many proposed developments have been put on hold over the last few years whilst developers have waited for an upturn.
“Regrettably, in the first quarter of this year we saw a great many companies, large and small, go into liquidation, in some cases taking the professionals and building supply companies with them. They were simply unable to ride out the tough period.
“While it may be true that some of these had grown too big too fast, many were quite reputable small operations which cannot really be blamed for not foreseeing the downturn.”
One of the factors which led to over-confidence in the development sector, said Henry, was the expectation that the World Cup hype would lead to boom conditions in which almost any property would sell or rent at prices not seen before in Cape Town.
“This expectation was, of course, not realistic and was downplayed from an early stage by both our chairman, Bill Rawson, and Tony Clarke, MD of Rawson Properties. The take-up has simply not been there.”
Astute developers, said Henry, did read the signs, saw what was coming, held back and waited for “the cherries to fall from the trees”.
“The recession has not been easy,” said Henry, “but it has helped some of us to pick up development opportunities at prices that are a great deal more reasonable than they were in 2008/early 2009.”
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