As I write, another Valentine’s Day has safely rolled into the rear-view mirror, and now only a wedding anniversary and a birthday remain to be negotiated this year. Not that romance is totally devoid from my approach to these important occasions, but frankly, they can be a bit of a minefield. Forget any one of them, and the doghouse beckons, a faux pas trumped only by remembering the event by the skin of one’s teeth and then grabbing some dog-eared tulips courtesy of the renowned emergency florist, Texaco. In my experience, such sins can cast a long shadow and so merit multiple diary reminders just to be safe. Hence, I can’t help thinking, one down, two to go.

And given that this is the season of romance, I thought I would give everyone a timely reminder not to get emotionally attached to any aspect of your property development project. You see, some people manage to fall in love with their projects quite easily, and it’s usually got something to do with feature walls, soft-close kitchen drawers or state-of-the-art integrated audio systems.

But if you’re going to fall in love with your project, can I suggest there’s one area that deserves to be put on a pedestal above all others? And it’s got nothing to do with walls, drawers or speakers.

I’m talking about the numbers. I know that probably sounds unromantic in an industry that attracts people through its creativity, transformational potential and, of course, the attraction of significant profits. But let’s face it, development is ultimately a financial exercise. Buildings may be bricks and mortar, but from a developer’s perspective, projects live or die by arithmetic and the figure in the bottom right-hand corner.

I’m frequently struck by the question that sits quietly behind many conversations with novice developers. It’s rarely expressed directly, but it’s always present; ‘What if I get this wrong and lose money?’ There’s no great mystery regarding the attraction of development. The possibility of generating six-figure profits from a single project is compelling, particularly compared with
the relatively modest gains available from more traditional investment strategies. Yet the very scale that makes development exciting is also what makes it risky. If a project has the capacity to make a substantial profit, it also has the capacity to incur a considerable loss. That reality is not something to shy away from; in fact, a healthy respect for it is essential to becoming a competent developer.

The new developers who concern me most are not those who worry about losing money, but those who don’t. Fear, when channelled properly, encourages discipline. It forces us to slow down, check assumptions, and interrogate our numbers multiple times. Overconfidence, by contrast, is fertile ground for error. In development, the difference between profit and loss often lies in margins, which are controlled by numbers.