We all dream of a glittering international real estate project, an impressive skyscraper with the most beautiful view in the city. But just before jumping into the deep water of building overseas, let's talk about the elephant in the room - managing a project from a distance.
You invest your best money, time and energy to realize a dream, but sometimes that dream can turn into an ongoing nightmare.
The distance, the lack of control, the fear of mishaps and delays - all of these can turn your life into hell. You are in a foreign country, far from home, missing your family, coping with language and cultural barriers, and sometimes feeling that you have no one to turn to. As a lawyer and international real estate developer, I have accompanied over 300 deals for investors and developers, and I have seen the tears, the frustration, the despair. But I have also seen the successes, the satisfaction, the pride.
True, today's technology allows us to be connected from anywhere in the world, but when it comes to construction, no Zoom or WhatsApp will replace presence on the ground. A KPMG report shows that projects managed remotely tend to exceed the budget by about 20% more and suffer delays of up to 50% compared with projects under close management.
So how do you nevertheless manage to bridge the distance? Here are a few tips and insights that will help you build your dream tower even from afar:
1. Establishing local infrastructure: This is perhaps the most important tip! Don't compromise on experienced and proven professionals, ones you can trust with your eyes closed. Success abroad depends to a large extent on the ability to build cooperation with reliable professionals. A quality local team will include, among others:
a local lawyer who works in real estate, because legal guidance is essential to ensure the project meets all legal and regulatory requirements. The lawyer will take care of drafting contracts, handling building permits, registering properties and more; an architect, who will know how to adapt your dream to local regulation, local conditions and the needs of the target audience; an experienced main contractor with proven experience in similar projects and a good name in the field; a local tax adviser/accountant who will help in understanding the tax laws in the chosen country and ensure optimal tax planning; a local building supervisor, who will make sure the construction meets local standards, the designer's plans, the required quality and the schedules - all of them need to be part of your team.
Ask for recommendations about each of them from colleagues, business partners and other relevant parties, don't skip it, and run a comprehensive background check on the chosen professionals, including checking licenses and certifications, prior experience and client references. Meet them face to face to examine the fit and the chemistry between you.
2. Communication, communication, communication: Set regular reporting times, use advanced technological tools (project management software, site cameras and so on), and ensure full transparency.
A Harvard University study showed that open and continuous communication reduces the chance of budget overruns by about 15%.
It is important to internalize that success abroad also requires understanding and adapting to the local culture. It is important to be sensitive to local customs and norms and to act with respect and patience. For example:
- Cross-cultural communication: Knowing the basics of the local language and maintaining clear and respectful communication.
- Managing negotiations: Knowing the negotiating style customary in the country.
- Understanding local norms.
3. Frequent site visits: Yes, it takes time and money, but there is no substitute for physical presence. Site visits will let you see the progress of construction up close, identify potential problems, and strengthen the connection with the local team.
4. Risk management: Building abroad entails many risks - regulatory changes (it is important to stay up to date on changes in tax laws and laws concerning the construction industry in the chosen country, to hold periodic update meetings with the accompanying lawyer and the accountant, and to act in accordance with professional advice), exchange rate fluctuations (you can buy foreign currency in advance or use currency hedging to reduce the risk associated with exchange rate fluctuations), natural disasters and more. Prepare a comprehensive risk management plan that includes possible scenarios and ways of coping with them.
5. Project management: Managing a construction project abroad requires meticulous planning, control and compliance with budget and schedules. It is recommended to use digital project management tools and to maintain continuous and transparent communication with everyone involved.
6. Close legal guidance: Don't skip having a lawyer who works in international real estate accompany you throughout the entire process. The lawyer will make sure all agreements and documents are in order, protect your interests, and help you cope with legal challenges.
7. Be patient and flexible: Construction processes abroad can be long and complex. It is important to show patience and flexibility and to be ready to cope with unexpected challenges.
Remember, international real estate development offers great potential for Israeli developers. With proper planning, effective risk management and correct conduct, you can realize the dream and build a successful real estate project overseas.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית