All the real state developers have seen with their own eyes and sink into their seats whenever the issues they have to face when it comes to the construction of value proposals. A good share of current developers may well know, that their projects may be destined to be thousands of generically built houses spread across remote suburbs in Panama with little to no access to basic amenities or services.
Every year, developers invest millions in land acquisitions and development costs only to find out that the market of their product has become obsolete, their constructions haven’t sold, or even worse – they have been abandoned. This is the case scenario for several of the housing corporations of the country that confront an ever more competitive business game.
The inmobiliary market in Panama is seen as a fundamental pillar of the economy, representing almost 30% of the nominal PBI of the country. The demographic tendencies which back up this information are encouraging; demonstrating an age average of 27 years old and a growing middle class. Panama is actually one of the countries with best inmobiliary growth in Central America. The direct foreign investment in Panama has been one of the determining factors for the economic growth, given to the consistencies that has demonstrated the international capital flows incoming through the last years. The direct foreign investment stands as the second most important in the total investment of the country; which creates an excellent projection of the inmobilirary growth.
Nonetheless, regardless of the dynamic investment environment, the growing appearance of competitors alters the status quo of Panamanian developers, affecting the opportunities to capitalize a base of prosperous consumers that’s growing and ever more informed.
Therefore, the developers must reflect deeply in the developing of a value proposal that’s different and goes beyond the competition, which only offers square meters to create a unique value proposal.
Build value propositions, before building housing opportunities.
Until very recent, residential developers have sustained a posture somewhat complacent in regards to the market. Few developers in Panama possess enough insight for their development areas or an expansion plan for their projects. In many instances, the projects are constructed on an inventory destined for familiar or commercial development. This represents a big restriction given that the lands are generally not adequate and the locations are not being exploited to their maximum potential.
This is only one example of how developers are able to start planning their long-term growth strategies, anticipating the market tendencies and understanding the consumers behavior instead of running the risk of a failed project. The lack of long-term strategic planning in the inmobiliary market is alarming, especially at the growing cost of mistakes and the strength of competitors or stakeholders which impose pressure on the face of lowered income margins.
In the search of uniqueness
The idea of searching for small and unique segments to grow can seem contradictory. In theory, the impulse for growth can be found in the ability to diversify new product areas and attend as many clients as possible.
Nonetheless, pointing towards specific clients through a personalized value proposal reduces the reach of the market. In our experience the solution is to offer a major quantity of development pointing towards the same market output; contrary to what’s generally believed: diversify multiple living options to different segments of the market, given that it takes to an isolated development every time smaller and of minor national reach.
Which means, transcend beyond the three basic lines of segmentations considered in Panama which are: acquisitive power, geography and mortgage accessibility. As Panama’s middle class expands and becomes the most demanding in regard of its needs, the necessity to segment even more the most profound amenities of the clients for a better understanding of the needs that aren’t met and capture the latent demand which will be fundamental for the market.
The opportunities to capitalize this latent demand are multiple: for this the housing developers should stablish a proposal of unique value, which segments clients in several dimensions, to identify the products and services with market potential without exploiting it.