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Article of the Week - Maximising your environmental returns 06/02/2014

The argument about whether or not environmental initiatives undertaken by developers resonate with buyers, and are useful selling points, has been around for some time. SMR’s “What Home Buyers Want” survey conducted across 20 residential estates, sheds some light on the subject, but also poses more challenges for developers. There are many excellent examples where developers have “done the right thing” however, it appears that a sizeable segment of buyers in these estates are unaware of what their developer has done to improve the environment in which they live. While some developers may not attribute marketing value to environmental initiatives, they all attribute marketing value to happy customers. Results strongly suggest that there is a link between customer satisfaction and developer’s environmental performance.

On the surface, from hard paper evidence, there are many estates that have performed well with a few excellent results, of note, The Glades estate in Byford. 87% of survey respondents rated the environmental initiatives undertaken as “Excellent” or “Good”, with the majority choosing “Excellent”. Buyers in estates surveyed in Australind, Treendale and Eaton voted developer performance highly, outperforming Perth estates. Not all estates achieved a positive result with 70% of buyers in a development in Wanneroo not impressed by their developer’s environmental initiatives, or lack thereof. Buyers surveyed in 10 of the 20 estates surveyed rewarded developer’s efforts with over 60% giving a rating of “good” or “excellent”. Clearly, good environmental work is carried out by some developers that is well communicated and recognized by buyers in their estates. However, there are an equal number of estates where buyers are either unaware or who are not impressed.

When we dig a little deeper, some of the reasons for the ratings become evident…. and also why there is some confusion and lack of awareness amongst some buyers. To get a clearer picture, and for the first time in the 5 year history of the survey, SMR conducted face-to-face interviews in 12 of the 20 estates. Several key points on the environmental topic emerged:

  • Many of the residents we spoke to were completely unaware of any “environmental initiatives” carried out on their estates by their developer. This was true even in estates where the estate’s website listed a number of environmental initiatives or the developer boasted significant sustainability or environmental credentials.
  • Some people interviewed, particularly those from non-European cultures, think that “environmental initiatives” means keeping the verges mowed. In other words, “environmental initiatives” is, to them, about how an estate looks. This is important and shows that there is some confusion out there about the whole “green” issue.
  • When buyers who bought in early stages of the project are told by sales people that natural bushland in, adjoining, or that they can overlook from their estate, will “always be there”… and then they witness it being bulldozed, or they find out that there will be another sea of houses there… they get very annoyed and disillusioned and will rate the developer down on environment.
  • Where buyers in the early stages of an estate love their retained/natural bushland, trees, wetlands and reclaimed watercourses, they become very disappointed if these are not included in later stages and they mark the developer down on environment.

Incentive packages are another source of environmental initiatives. Many people interviewed wanted to list “free rainwater tank”, or “free grey water system”, or solar panels as their number one preference. Yet when we spoke to buyers, they talked about a lack of trust as to how the costs could be offset by the developer in the sale price. With concerns about rising energy and water prices, a number of buyers felt that effective rain water tanks and solar panels could be standard inclusions rather than optional extras.

Developing awareness amongst buyers of praise-worthy environmental work carried out by developers clearly requires more than a comprehensive description of that work on an estate’s website. Effective communication using channels that buyers use, customized for individual estate target markets, would go a long way towards helping buyers appreciate the environmental initiatives of their developer and, by extension, improve their perceptions of the developer performance in that area and increase their customer satisfaction levels.

Do buyers care about developer’s environment initiatives in their estates? The results of the research reveals that they do, regardless of their interpretation of what “environmental initiatives” means and/or whether or not they have knowledge of work done by their developer.
Significant environmental undertakings such as those that would earn an Envirodevelopment certification require a genuine commitment from the developer and deliver real benefits to residents. If communications are effective and buyers understand how these initiatives contribute to their quality of life and lower bills, then there is enough evidence to suggest that environmental initiatives can contribute to buyer satisfaction and therefore referrals and improved sales rates. Providing “green” incentives such as free grey-water systems, free rain water tanks, water-wise front yard landscaping may appeal to buyers, if the developer ensures transparency of value.

There are plenty of examples of visual “environmental initiatives” such as those that appear in as entry statements and surrounding Stage I, where the sales office is located, and which may be more to do with presentation yet communicate care for the environment. Buyers expect that similar will extend throughout the estate, if to a lesser degree, and that it is maintained. How that happens is partly reliant upon the developer and partly upon the local council. Some conscientious developers supplement council park and verge maintenance for the full sales life of the project. Informing residents of when the handover to council occurs may be useful. Informing them of supplementary work carried out would be a good PR exercise and may increase buyer satisfaction with the environmental factor and referral rates.

It would be advantageous to developers if sales staff were equipped to communicate whether bushland is being retained or not, both within an estate or on adjoining land. Although one would assume that buyers do their homework and find out what potential estates will be developed in their area, they generally don’t and will blame the developer and feel deceived if a sea of houses appears next door when they thought that they would have “bush forever”.

SMR concludes that yes, “environmental initiatives” can be useful for marketing in residential estates but only if the developer has an intimate knowledge of that particular target market, initiatives are effectively communicated using channels relevant to buyers, and that efforts to improve the environment are well executed throughout the life of the estate.

For more information including the Overall “What Home Buyers Want” Survey Report and Regional and Individual Estate Reports, plus advice on communication strategies to maximize buyer satisfaction, please contact Debra Bambrook on T: 08 9367 1594 or E:debra.bambrook@smr1.com.au

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