I had the opportunity this fall to travel with my wife to South Africa for a couple of weeks. Between enjoying Cape Town and going out into the Savannah to see exotic animals, it was everything you’d imagine it to be. The only downside was the jet lag.
Part of the experience was, of course, eating. South Africa is renowned for its vineyards, and it has a few high-concept restaurants that offer tasting menus of chef-selected pairings of dishes with wines. I was excited for one of these, in particular. It was the “bucket list” spot, the one everyone said I needed to go to. It was always booked, requiring reservations long in advance. Food critics around the world were raving.
When the night finally came, everything about this place was…just OK. The atmosphere was a little stuffy, but OK. The food and wine were OK. And the price—well, let’s just say for that price, I was hoping for a lot better than OK.
On another night, we went to a different spot. We hadn’t heard of it before, but a few locals recommended it. Though the culinary style was similar, the experience could not have been more different. The feel was refined, but low-key. The chef seemed more interested in what diners actually liked than in showing off his credentials. The entire meal was more than excellent. And the price—well, let’s just say it was worth it.
So what did I learn from this little episode that is relevant to the real estate investment world? At least three things:
- Hype does not always equate to value
The latest and greatest investment trend or property type or mixed-use development may not be all it’s cracked up to be. The buzz may be masking a weakness. And even if it isn’t, it can raise both the expectations and the cost of entry so high that only perfect results could justify them. Being “just OK” will seem like failure.
- Locals know best
To understand what is really happening in a market, you have to talk to the people who experience it every day. When it comes to travel, that means listening to the locals and watching where they live, eat and play. In real estate, it means working with people who are looking at more than just spreadsheets. Real market experts know the stories behind local submarkets, buildings and development projects. These are the people who can help you find the hidden gems.
- Taste matters
Sometimes an opportunity looks great on paper and people with a strong track record are leading it. But it still may not be your cup of tea. To continue the restaurant analogy, if you don’t like sushi, you don’t like sushi. Neither the freshness of the ingredients nor the skill of the chef will change that. If a real estate investment seems good, but doesn’t quite match what you’re interested in, you probably won’t be happy with it. You should pass.