Creating Real Estate Investment Through Joint Venture Partnership in Nigeria

ESV Kennedy Anene

Joint venture comprises two or more individuals forming a partnership where they agreed to jointly undertake a real estate project to completion. While creating the Joint Venture otherwise known as JV, the partners involved looked out for current and future benefit and profit from the resulting partnership.

Joint Venture in real estate, mostly comes to establishment when one party may have land and the other party provides the capital to fund and complete the real estate project and this is mostly executed by developers.

Real estate development in Nigeria is an expensive process considering the cost of building materials and rising of cost inflations/importation. So, transferring these parts to a developer is beneficial to the land owner as the owner is able to potentially profit more than if he had sold the land undeveloped.

The money that can be expected to be returned to the land owner can come in a variety of ways and is often a combination of such. Depending on how the deal is structured, the land owner may receive an upfront payment, or a share of the developed properties.
The property developer profits as they would not have to put money down to purchase the said land for development, before eventual sale. In essence, initial costs for the developer are significantly reduced and the building process can be quickened. Thus, making it a win-win situation to the parties and the partnership is established on a mutual agreement between the land owner and the property developer to develop the landed property into an agreed structural design; office complex, shopping mall, residential flats/apartment, detached or semi-detached house or others.

In going into Joint Venture, sharing agreements is also factor into the transaction as factors like; land cost, location, statutory regulation on number of floors, approval costs, site preparation, interest rates and duration of the proposed all have to be considered.

Joint ventures can however be established and secured through Real estate professionals, but 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.
Joint ventures establishment can be a better way to fund a project and become property owner in Nigeria or other desired location of choice and it is commonly a win-win situation for both parties coming together for the partnership, usually the land owner and the developer.
ESV Kennedy Anene is a Lagos based Estate Surveyor and Valuer