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Developers trying to lure customers into soft market

They're offering discounted prices, free upgrades and other incentives.

By MIKE DONILA
Published January 28, 2007

CLEARWATER - Bulldozers and cranes are again making noise along Clearwater Beach, as builders work to complete major condominium projects they started years ago when the market was booming.

The sales centers, too, are coming online, and some developers are trying new things to lure customers and secure funding a little quicker.

They're discounting prices for early bird buyers, offering upgrades at cheaper rates and throwing in other incentives such as extra parking spaces.

Some developers say this is common. But others in the real estate world say the extras reflect a soft market that's oversaturated with condos.

"Before, developers didn't have to cooperate with brokers because there was such a plentiful supply of buyers," said David Little, a real estate agent and redevelopment chairman for the Clearwater Beach Chamber of Commerce. "But when the buyers are few and far between, the developers have to attract them to the market."

Some developers, however, have their own reasons for the incentives.

From his newly remodeled sales center, businessman-turned-developer Uday Lele says he's cutting 20 percent off the price for the first 50 buyers in his massive Enchantment beach development. That's a hefty discount, he says, for a condo that can cost up to $2-million.

Also, Lele says, he'll throw in an extra parking space, another $50,000 to $70,000 savings.

The Enchantment, a 90-unit complex shaped like an open butterfly, was supposed to break ground this summer. But Lele reduced the size of some rooms, a move that saved him about $9-million in construction costs.

"I wanted to pass the savings along to my customers," Lele said.

Other beach projects - some in downtown St. Petersburg - are also offering specials. Among them:

- Steve McAuliffe, with JMC Communities, says his company is offering pre-construction costs for condos at the Marquesas on Clearwater Beach and Ovation in St. Petersburg. The vice president of sales and marketing says the first 74 units at Marquesas will cost buyers $70,000 to $200,000 less if they buy now. He said the sales office, which opened in November, has made about 20 sales for condos that start in the mid-$700,000s and go up to $1.7-million.

- JMC is also offering pre-construction rates and "decorator allowances upwards of $100,000" for condos at Ovation.

- Kirit Shah, president and CEO of Kiran Grand Resort & Spa on Clearwater Beach, said the development has pre-construction rates, and the savings will fluctuate depending on the market. He said more incentives could be offered later. Shah said so far, "we're doing okay," selling beach condos from $350,000 to $1.9-million.

- NJR Development president Neil Rauenhorst said his Aqualea Resort and Residences on Clearwater Beach will have pre-construction prices "for a certain portion of this year." The rooms, 250 condo-hotels and 18 condominiums, cost between $500,000 and $5.5-million.

Condo sales throughout Pinellas County have struggled, especially along Clearwater Beach, which lost thousands of hotel rooms to make way for a number of high-end developments.

Developers say they've had trouble getting customers because of high taxes and rising insurance rates, and that increasing construction costs also delayed many of these projects.

This is a far cry from two years ago, when sales were so hot that buyers were flipping units, sometimes a day after buying them.

"At this point, it's a function of the market," said Shah, who is partnering with entrepreneur and philanthropist Dr. Kiran Patel. "When the market is soft, some developers discount it further."

McAuliffe said JMC has always offered the pre-construction pricing incentive because it sells units faster. He said prices are later raised "accordingly throughout the life of the sales process."

"We have to typically meet a percentage of pre-sales before the bank will release any funds (in order to build)," he said. "You always want to try and meet pre-sales as quickly as you can to begin construction."

[Last modified January 28, 2007, 20:52:27]