Real Estate Development Management
In today’s market, can you continue to create and capture exceptional returns?
You may have hired the best real estate development management consultants.
Also, you may have worked on a “Highest & Best Use” (HBU) study.
Besides, you may have used every value engineering tactic available.
However, you see no results.
Even with the many marketing strategies out there, your absorption and occupancy rates are still decreasing.
So, how can you continue to gain higher yields and better returns on your real estate development and investment activities?
We need to find few answers here:
What project will yield higher returns?
How should we develop this project?
How should we market and sell it?
“THE MOST CRITICAL QUESTION TO ANSWER IN REAL ESTATE DEVELOPMENT IS WHAT SHOULD WE DEVELOP? WHEN WE GET THIS RIGHT, EVERYTHING ELSE THAT FOLLOWS WILL STAND TALL ON SOLID GROUNDS.” – Ahmad Khalaf
How do the real estate development management teams make their decisions?
Some developers base their choices on mere aspirations or impressions.
Thus, their business strategy is: “follow the market with a twist.”
They do not realize the severe consequences that this single error in judgment could have.
Real Estate developers who adopt this approach are at the mercy of the market.
They make money when the market goes up. Similarly, they are the first to lose when the market goes down.
Any real estate development project that offers no particular function and that does not fulfill a specific demand will only cost you more to build.
Further, it will generate you less revenue.
What about real estate development management consulting?
Leading real estate consultancy firms cover every sector in the market.
This vast scope includes the residential, commercial, industrial, hospitality, entertainment, retail, healthcare, and education sectors.
These professional real estate development management firms will present to you their recommended development schemes and programs based on proper demand and supply analysis.
However, after you finish construction, you may very much end up in an entirely different position.
By that time, you could face an oversupply situation. Thus, you may encounter reduced absorption and occupancy rates.
Accordingly, your project could yield lower rather than higher returns.
Why does this market discrepancy happen?
First, Real estate development is a 3 to 5-year process. By the time you deliver your project, you will be offering a similar product to all other developers who received the same recommendation as you did.
Second, markets are changing at an accelerating speed. The last thing that you want to do is to play catch with the demand.
Third, all these recommendations use the same basic real estate development management methodology, which is benchmarking the competition.
Benchmarking is a robust market analysis tool. But, solely depending on it will only lead you to what everybody else is already doing.
We all noticed how most developers tend to move in the same direction at the same time. The fastest developer reaps the fruits. The followers get the leftovers.
Even if the recommended project is delivering higher returns at this point, there is no guarantee it will continue to yield the same profits by the time you develop it.
The reality is, you will never get outstanding results if you only benchmark yourself to what the competition is doing.
What did this phenomena teach me?
By getting creative in making real estate development decisions, I will be missing the point:
“IT IS NOT ABOUT WHAT THE DEVELOPER THINKS. RATHER, IT IS ABOUT WHAT THE MARKET WANTS.” – Ahmad Khalaf
Copying the competition will make it nearly impossible to generate more money:
“BIG MONEY IS IN CREATING YOUR OWN SPACES, NOT IN COMPETING IN OVERCROWDED MARKETS” – Ahmad Khalaf
Only by identifying strong demand generators can you enjoy superior gains:
“IF THE PROJECT IS NOT IN DEMAND, THEN IT IS NOT WORTH THE TROUBLE; BUT WHEN IT IS IN DEMAND, THEN ALL THAT IT NEED IS TO BE REVEALED” – Ahmad Khalaf
Accordingly, I do not believe in creative brainstorming as a real estate development management decision-making tool.
Similarly, I do not focus on benchmarking exercises to identify a potential real estate development opportunity.
Ahmad's approach is impressive. We never thought we could generate so much value out of our land.His value-based market research approach identified several highly profitable development opportunities for our group.
How did I create above market value for my clients and business partners?
A large semi-government organization launched a massive mix-use development some ten years ago.
They were merely copying the trend at the time. In other words, they were benchmarking the competition.
The project miserably failed as it hit the wall by the end of the real estate frenzy.
Last year, the group’s chairman showcased many creative ideas in an attempt to re-launch the project.
I asked him for a chance to revisit the proposed development plan.
Six months later, based on my recommended asset mix, the land appraisal went from $9.00 to $ 30.00 per square meter . The valuation was carried independently by three international consulting groups. Accordingly, we achieved a 300% increase in land value.
More importantly, we created all this value without spending a single dollar on creative designs, aggressive marketing, or copying other developers.
At this point, several investment funds showed interest in the project at the new higher valuation.
These were the same entities that refused to invest in the project at a lower entry point.
Ahmad is not only an adept business development professional but also a good friend of mine whom I had the pleasure to accompany on many business trips over a period of 5 years.
He is very skilled at building strong relationships with both internal and external stakeholders.
The company was delving into unknown territory and Ahmad used his keen understanding of the local culture and his upbeat and positive personality to negotiate a reasonable agreement with the National Investment Commission.
What else did my real estate development management strategy yield?
I enabled a leading investment group to secure an $800,000,000 worth of land for a total acquisition cost of $15,000,000 only. This transaction doubled the project’s IRR.
I raised the value of an extensive portfolio, owned by a powerful family office, by 80%. The return on investment was 250%. That’s a $2.5 return for every $1.00 spent.
These results attracted several financiers and investors who were enthusiastic to offer their money because they found more value in the prescribed development plan.
A point to note..
Professional real estate development managers recognize the difficulties of creating above market value for an investor who insists on working in a specific sector.
Achieving positive results when you are in such a position is even more difficult than working on large, long-term, multi-phased mix-use real estate developments.
When I was in this situation, I still managed to bring out the estate’s full capacity.
I dug deeper within the client’s chosen sector to single out a poorly serviced market segment. I was able to increase the expected IRR from 18% to 27%.
How do I enable my clients and business partners to achieve such results?
The reason why I can generate superior value even in the most competitive markets is very simple.
For every project, I identify unique value generators and respond with a highly differentiated development that answers to that specific market gap.
It is this real estate development management strategy that allows my services to stand out and to bypass the competition time and time again
Can you achieve similar results?
I believe in risk/reward partnerships. I have my skin in the game. Contrary to conventional practices, I base my fees entirely on the incremental value I generate.
In other words, my fees are directly related to the incremental value I generate to you.
=> HERE’S THE DISCLOSURE
If you do not intend to optimize your project’s value or do not want to adopt a market-oriented development approach, I will not be able to help you.
So, if you want to work with me and enjoy similar results, you can contact me HERE.