OVERVIEW

The real estate joint venture model in property
development is a mutual business arrangement where
a landowner contributes his land towards a project,
while the developer is responsible for getting
approvals, actual construction and most times
“marketing”.
Real estate development in Nigeria is
expensive and quite challenging for an average
a person who isn’t real estate savvy.
Thus, most landowners would rather opt for a joint venture
partnership, which involves transferring the
responsibilities of construction and property
development to a seasoned developer. It’s important
to know that developing a piece of land optimizes the land
value.

PROFIT-SHARING
Depending on how the deal is structured, the
a landowner can get returns for his investment by either
getting an upfront payment(Premium), a share of
total expected revenue from the project or units of the
developed property.

LEVERAGE (OPPORTUNITY COST)
The property developer benefits in such a way that
much-needed funds are channelled into actual
construction rather than land purchase. Thus taking
significantly reducing initial costs and the construction
the process would be quickened.

PROPOSAL
The basis of the partnership is formed on a mutual
agreement between the landowner and the property
developer to develop a plot. (residential or
Commercial). The property is shared between the
landowner and developer with an agreed sharing
ratio. The project is expected to be delivered
within the stipulated timeline.

METRICS
Proceeds from the joint venture partnerships are
calculated and shared considering the following
factors inclusive of land cost, location, proposed
structure, infrastructure, approval and other
administrative costs.

RELATIONSHIP & RESPONSIBILITIES
It is important to note that joint ventures are
fundamentally built on relationships. The stronger
your relationship with a prospective partner the easier
it will be to strike a deal. When it comes to real estate
joint ventures, working with a real estate broker is
perhaps the easiest and least stressful way of finding a
deal. The landowner is expected to provide the
developer with the land without legal or financial
liabilities or encumbrances. The developer is
expected to deliver quality structures with standard
finishing at an agreed duration.

CONCLUSION
Joint ventures are a great way of funding property
development in Nigeria. It is usually a win-win situation
for both parties involved: the landowner and the
developer. However, enticing the joint
venture arrangements seem it is advisable to engage
professionals from project conception to project delivery
for due diligence and control.