The ongoing Eurozone crisis may have dealt a serious blow to investor confidence in previous months, but the market is far from grinding to a halt. In fact, many property investors are finding this time of uncertainty the perfect opportunity to snap up cheap deals. But while an unconfident market may mean less competition for purchases, wary vendors will still need convincing in order to clinch the deal.
Knowledge and relationships
As in so many other areas, knowledge is power when it comes to doing deals, both a broad awareness of the market and a thorough understanding of the specific sector. Without this knowledge you could be buying into a market that has no future. It is vital to cover all possible eventualities when acquiring a new property. Knowing your market will allow you to spot more opportunities and will give you further options to diversify. The seller too needs to be aware of the market in order to gauge the worth of the property they own.
Being able to successfully buy and sell also comes down to having a strong network of investment agents. From the outset it is crucial to recognise that the property industry is one that is governed by relationships. Building up a network will open doors and present opportunities that would otherwise have been neglected or unrecognised. Ideally your agents should be located in a number of different markets and regions; they need to have an in-depth knowledge of the area they work in and thus will be able to offer you sound advice about your chosen market. This also introduces the need to understand your own vision. Buying and selling property can be a lengthy process, but by working with people who are able to share and value your vision, you will increase the likelihood of identifying the best opportunities.
Your agent network will also be crucial when wanting to explore new markets. Sticking to what you know due to previous success can work, but an innovative developer will be aware of promising and current trends. To spot an emerging market you must have your finger on the pulse and those who take the time to seek out new markets will reap the rewards. Investing in a new market before your competitors may also mean that you buy in at the bottom end of the value curve, which will allow you greater scope to develop. For instance, the technology sector has developed hugely over the last few years, and it is possibly the growth sector for property developers to invest in. The demand for data storage space, in the form of data centres, is growing exponentially and this is a trend that will continue as the world becomes increasingly dependent on technology.
Confidence and reliability
Before any negotiation or bargaining can begin, you need financial support in place. Again, relationships are key in the property industry, including those with your banks. Understandably, both investors and banks are likely to be more risk-averse during an economic downturn. They will not be as confident to back new ventures and will be tempted to stick to familiar ground. This wariness frequently extends even to more reliable investors with solid ideas, and European banks also tend to be reluctant to get behind international ventures. However, businesses that have a history of integrity, reliability and performance are far more likely to attract new investors and bank finance. Being transparent about your finances will allow everyone to have confidence in your business. Moreover, for those that are able to secure the finance, there is a huge amount of opportunity for high returns at a time when others are reluctant to commit.
Property developers need to be quick on their feet and possess a decisive head. Property is a high stakes industry; a clear vision, knowledge, finance, a network of agents and a reputation for integrity will equip you to be a successful deal clincher.
About the author
Edward Jones graduated from Reading University with a BSc (Hons) in Land Management, Planning and Property Development in 1988. He started his career with Rugby Securities and, following a period at Link Parks Group, joined the real estate corporate finance team at Barclays de ZoeteWedd in 1992. In 1997, Edward moved to Grosvenor Developments with responsibility for a number of major development projects both on and off Grosvenor’s London Estate. Edward joined PMBH in September 2000 and since 2001 has been responsible for the Group’s investment and development business in the UK. He became CEO in April 2012. When Edward was 18, he worked his way across America on a travelling carnival.
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