Key Elements of Successful Real Estate Joint Venture

People that are desirous of setting up one of the successful real estate joint ventures need to understand the key elements of such joint ventures. It plays a very crucial role especially in case of large scale real estate projects. Joint ventures are important for development as well as financing of most of the large real estate projects and that is why the concept of real estate joint venture is taking the driver’s seat in the real estate industry.

Real Estate Joint Venture is Specific Task Based

Arrangements relating to the real estate joint venture are focused on the ultimate objectives of development of real estate project. Towards this end the stakeholders combine their resources and invest them in the joint venture. It is therefore essential understanding the specific role played by each of the partners in the joint venture.

Role of Partners in Real Estate Joint Venture

In the joint ventures the real estate development companies that are experts in managing the development of real estate projects enter into a partnership with the capital providers that are real estate investment companies to properly manage and run the real estate project. These investors provide the capital necessary for running and setting up the real estate project.

Basic Principles in Joint Ventures

Basic principles in case of joint ventures in the real estate industry is that there would be at least two parties. One of them is the developer of real estate and the other partner is the investor that takes care of the capital needed to run the real estate project. It is essential that the agreement concluded is such that it is conducive to the development and improvement of the real estate project through the real estate joint venture taken up. In any case, the aim is that the project does not get stranded due to want of organizational or financial support at real times. Most of the joint ventures in real estate industry thus have two different entities. One is the physical working partner and the other is investing or financial partners.

Clear Cut Area of Operation is required

In any joint venture there can be a possibility of overlapping of the activity areas of the two stake holders. The venture should be build to suit commercial real estate and it is necessary that the powers and jurisdiction as well as operational area of the partners in the joint venture. Otherwise the joint venture may not achieve the objective for which it was set up and the process might backfire. The aim is that the experts in their respective fields should function in such manner that it won’t affect the operational ability of the partner adversely thereby also negatively affecting the outcome in respect of the main project.

In essence; the role played by both  joint venture real estate investors as well as developers are equally important in making the joint venture successful. Key element in the success of the venture is contributing effectively to the overall development of the real estate project without interfering in the operational area of other partner. It would be good obtaining the services of a specialist agency in preparing the working draft for the joint venture. 

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Created on Nov 23rd 2018 06:27. Viewed 435 times.

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