20 reasons of failure of cottage settlements

02.08.2020 01:00
In this article, we will cover 20 reasons for failure in cottage towns and villages. 1. Sentence structure - an incorrect definition of the competitive situation in the market leads to increased liquidity risk and unpredictability of the final result in the development of project cottage community in the future.

2. The structure of demand - wrong definition of the level of demand distorts perception of the real capacity of the market in the current location under the circumstances. This leads to a significant shortfall in paying customers, delaying the timing of households and a deterioration of the overall financial results (and sometimes loss of the project). As demonstrated by the Russian practice, more than half the settlements, crash victims at the suburban real estate market, overestimated demand for its facilities.

Related article: What is a cottage community?

3. Location of the site - the wrong assessment of the viability and the overall capacity of the site at the initial stage of talks on its acquisition - the main error of Ukrainian investors and cause unforeseen consequences in the development of the project.

4. The target groups of consumers - high capacity market is not yet a success cottage village. First of all, you should choose a group of consumers who are willing to acquire ownership under the current market situation, in this place, at the offered price and have already identified a comprehensive set of technical, infrastructural, recreational and social elements of your property.

5. Positioning - positioning errors lead to a mismatch of elements of the settlement required the market requirements, requirements for such facilities. As a consequence - focus on a completely different target audience, usually with low demand and the unpredictability of the final financial result in the period.

6. Determination of the competitive advantages of the project - even with proper positioning, a high level of effective demand, there is always a strong competitor that can not only win over some consumers, but also to win the market completely. To minimize the influence of this factor, an indispensable tool supports creation of competitive advantages of the village in order to maintain the projected rate of sales, or accelerate the complex process of implementation.

7. Pricing - the consequences of re-building project price can be very unpredictable, ranging from delaying the timing of sales, followed by increased competition (the competitive situation is aggravated with every passing day, more thoughtful villages replacing their weak brethren) and ending with the loss of a minimum safety margin, which is laid in the project, with its inevitable loss ratio.

8. Consumer features a cottage settlement - include number, metric area homes and land area, the best architectural and planning decisions, etc. These parameters are formed on the stage of studying of consumer preferences, taking into account the perspective of prediction and minimize the risk of liquidity. With their harmonious integration and connection with the above factors, as well as the favorable market trends, the success of the project if not guaranteed, it is quite predictable.

9. Features of the planning area - often intersect with the selection of the optimal architectural style of the village, which together satisfy the aesthetic and functional needs of customers. Inefficient planning and landscaping repels consumers, while at the same time is unacceptable dissonance between the demands of the market and urban development opportunities the site, which is often overestimated.

10. Infrastructure component - the high cost of development of shopping and entertainment areas in the absence of consumer demands can cause financial insolvency of the project, and during its operation - an intolerable burden for the management company and its owner.

11. Security - an ill-conceived system of security may cause refusal of residence in the township. Practical experience in sales indicates a high influence of this factor on the final decision on buying a home user.

12. Design - sometimes desirable not to dock with the possible. Wrong approaches to the development of the project (still at the stage of conceptual design study) lead to unpredictable consequences. Major errors occur at the stage of comparing the Consumer parameters of the project (ideas) with the mandatory town planning rules, which are not uncommon discord and lead to a resumption of work already done and the loss of precious time.

13. Engineering support - lack of power grids, gas and water supply, sanitation cause discomfort to occupants and constant complaints from their side. At the same time, the excess of the required load (at design and execution of work on the laying of communication lays the load higher than necessary) leads to unreasonable cost to the developer, who will never pay off.

14. Construction - incorrectly selected a general contractor (subcontractor) and the ungrammatical costed estimates, coupled with the failure of its commitments - the main cause of insolvency of the project, even with high market potential.

15. Operating costs - due to ill-conceived infrastructure and management policies appear high maintenance costs that are not willing to pay consumers. This factor leads to a significant tightening of the terms of sales houses and the emergence of conflicts between the management company and residents of the village.

16. Strategy and program sales - the basis for success of any project. Typically, an error occurs during the initial phase of market entry, when forming the image of the village, the developer, seller and manager of the organization. Mistake at this stage is inexcusable and can lead to a negative opinion about the object that will ultimately cause the failure of the whole project.

17. Communications strategy - advertising policy and program PR-events no less important than the sales strategy and correctly chosen niche market. At this stage, the consumer must inform potential buyers about the competitive features of the project, to lay a positive view of the village and, most importantly, to choose the media that fit the target audience.

18. Methods of sales promotion - even while meeting all the above conditions consumers expect incentives. A correctly designed and elaborated their system does not just facilitate the sale, but also greatly accelerate the process of project implementation.

19. Financial performance - financial planning, budget revenues and project costs, precedence of its development, etc. based on the above stages. Mistakes happen here to a greater extent the fault of the financiers, rather than force majeure.

20. Analysis of project risks - incorrect implementation of each of the above described steps, the inability to predict and time to eliminate the imminent threat gives rise to a force majeure in the course of project implementation cottage village.
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