It takes a great deal of knowledge, experience, strategic thinking, and even a healthy dose of creativity to get the best out of an investment site. This is because multiple parties – whether that be government, vendors, developers, or private equity firms – will bring their own interests to the table hoping to realise “the highest and best use” for a project. This might sound like the common objective, but in fact, the journey towards this is only just beginning. As the orchestrator of the transaction, a property investment company must determine the best way to achieve the uplift in land value, and in the process, encourage a “meeting of the minds” amongst all parties involved.
Indeed, knowledge and experience are the foundation of successful deals, but the art of a successful negotiation (the journey towards a definitive objective) has much to do with soft skills and how they’re engaged. Here are some of the skills required to deliver a successful outcome for all parties to a property development deal.
First thing’s first, there are many ways to be agile, but above all, this is about how you think and your readiness to respond to parties’ individual needs. Staying agile can really make the difference between a project that goes ahead and one that doesn’t.
Let’s look at what “agility” might look like when dealing with vendors. It’s easy to assume all vendors want their money immediately. In fact, some vendors will benefit from an extended timeframe so they have time to find another property. Recognising this and responding accordingly could change the terms of a negotiation dramatically in your favour and result in a real win-win situation.
A vendor may even seek to close a deal early to acquire funds for a deposit on another property. In this case, agreeing to provide the vendor with the deposit they need upfront may result in more time to negotiate the wider deal at play.
Then, there are vendors who are indifferent to timeframes because they simply want to achieve a certain price. Agreeing to pay the higher price sought in return for some extra time to seek government or local authority approvals, could result in an even higher value development over time. Another win-win situation.
In each case, it’s essential to dismiss assumptions, ask the right questions, and be receptive and ready to respond with a bespoke solution that works for everyone.
Maintain an open mind
Staying open to all possibilities is paramount to achieving extraordinary outcomes. A truly open mind in this industry is characterised by several valuable qualities including; openness to the ideas of others, a drive for discovering ideas in alternative (sometimes unexpected) places, and never being afraid to break new boundaries or venture outside your comfort zone.
All these qualities combined have the potential to build value because often, the path least travelled is where the real opportunities lie. A great example of an open mindset at play might involve shifting the focus from developer outcomes to outcomes which deliver community benefits. In this case, investigating local concerns and priorities could yield new opportunites that meet community needs and deliver a win-win outcome.
Take an analytical approach
Be prepared to unearth and analyse the bigger picture – that means, never take it for granted that a party to a deal already knows the best solution to achieve their objectives. For example, a vendor who wishes to sell part of a precinct to reduce debt may not be aware of the tax implications and other liabilities that come with liquidating an asset.
Yes, they want to manage their debts, but refinancing or repositioning that debt could be the better solution. Alternatively, the property in question might not have achieved its full development potential and could benefit from additional infrastructure to increase the flow of visitors and residents to the site. After all, it’s about convenience, lifestyle, and community needs and if you don’t unlock those needs, projects may not do as well as you might think. Taking a broad approach from the outset and leaving no stone unturned when it comes to seeking solutions will go a long way.
Take an analytical approach
Otherwise known as emotional intelligence, EQ refers to the ability to perceive, assess and manage the emotions of yourself and others. It’s important to understand that in a negotiation you’re facing real people who have real life issues. For example, someone in the room could be dealing with personal or financial issues – the pressure points of everyday life.
Understanding and building a connection with the person across the table and, specifically, understanding why they are in front of you, could make the difference between agreeing or disagreeing. If you’re more receptive to who you are dealing with, you’ll always achieve a better outcome.
Communication is key
Simply – successful negotiations can only result from trust. Building a relationship of trust requires complete transparency which means demonstrating you’ve done your research, explaining methods and articulating the results in a way that everyone can understand and digest.
But it’s a two-way street. While it’s important to keep parties informed and back up your own ideas with clear and coherent evidence – it’s equally important to show you’re listening to them which instils a sense of purpose and belonging in the negotiation.
Great communication skills will also pay dividends at times of conflicting opinion – whoever is sitting on the other side of the table. That’s what gets results.
It’s incredibly important to have a conscious approach throughout the entire negotiation process. Whether we’re talking about personal circumstances, problem solving, or sourcing great new ideas and opportunities, being conscious of everything going on around you will improve the chances of success in achieving that all-important “meeting of the minds”.
But consciousness also goes hand-in-hand with a direct approach. As you navigate the headwinds and tailwinds of any negotiation, you’ll never achieve the best outcome if you leave everything to the elements.