Today I met with my landlord to discuss (ie negotiate) my upcoming tenancy renewal. It was an interesting discussion from which a number of good takeaways can be derived, but first let me share some context.
I live in Dubai and the law here protects tenants. Rental increases are limited to 5% per annum. If the landlord wants to cancel the tenancy contract, they must give 12 months’ notice with no rental increase. I used to live in Hong Kong where landlords can do whatever they want (a 100% increase was not uncommon in the decade before Covid), so the Dubai model shifts the negotiation power significantly in the favour of the tenant.
The Dubai property market has strongly appreciated over the past 12 months. This is the result of an easy and friendly visa application process resulting in many new residents, expats leaving covid-restrictive Asia for a more mobile-friendly expat life in Dubai, and a huge influx of wealthy Russians caused by the Russia-Ukraine conflict. Some properties have appreciated by over 100% in the past 12 months especially villas and super-high end developments.
I live in neither a villa nor a super high end development, so the rental increases are fortunately far more modest. My wife and I had checked the price and availability of equivalent apartments in our condominium, so we knew the current market. Using approximate USD values, my current rent is USD 45,000 per year and equivalent apartments are currently available for USD 50,000 per year.
My landlord is Indian and very successful. He owns close to 100 apartments and these are (I quote) “a side investment”, they are not his main business. This was the first time I had met him and he was very pleasant. As is customary in Indian culture (and many others), the opening discussion topic was around family and business, building rapport between us. I left it for my landlord to decide when to shift the conversation to the matter in hand which happened after approximately 20 minutes.
His opening salvo was that agents had been in touch offering USD 80,000 per year for the apartment, but he valued us as tenants and would accept a “very fair rent of USD 62,000 per year” – ie approximately 30% higher than what I needed to pay by law.
In negotiation theory, this is known as the ‘rejection then retreat technique’ where one side deliberately throws a number or a demand that they know will never be accepted, but in so doing they hope to catch the other side off balance and shift their perception of where a settlement is possible.
While on the face of it this is an aggressive tactic, what was fascinating was that he said this with a tone of voice and body language that imitated that he really was doing me a favour and looking out for my interests. A silky assassin.
In this case due to Dubai’s tenancy laws, I don’t believe even he expected us to agree to this, but clearly it was worth a try. And this brings me to a second reality in negotiation; there is a high correlation between having high expectations and good results. If you don’t try, you don’t get. However, there is a point at which the other side may be offended and this is what happened with my wife who was upset with our landlords attempt to charge us way over market after having been good tenants for a year.
Once again there are learnings here;
The first is that emotional reactions to the other sides offer are usually based on your perception of what is fair and reasonable. These are influenced by your culture and values and none of us have a monopoly on what is right or wrong. We have to learn to accept that different people negotiate in different ways not necessarily because they are bad, untrustworthy people, but because, whether through culture or experience, that’s how they have learnt to negotiate.
The second is that our landlord was simply trying to get the best deal he can, as were we. Providing we keep emotion out of the conversation and treat each other with respect, the discussion can continue and the likelihood is that a deal will be reached. This is one of the most important negotiation insights I can offer.
Finally, the process of pre-negotiation preparation is critical if you are to be able to repel aggressive requests from the other side. By having strong data points to counter the other sides ask, you have one of the most powerful tools any smaller party can use to counter a larger counterpart.
Negotiation is an enormous topic and I could continue for many more pages however in the nature of these blogs I will stop here. If you do want to learn how to shift the negotiation power in your favour, sign up for my online ‘How to develop Negotiation Power’ training and learn 12 strategies for shifting the negotiation power in your favour! As a subscriber to my newsletter I’ll send you a 50% discount code – email me if you’re ready to sign up.
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