Developers reducing risk with a win-win scenario together with landowners

A piece of land in the right location is the perfect recipe to develop a successful real estate project. The cost of the land can however be a very big deterrent for many real estate developers who do not have deep pockets. The interest component that accompanies a land purchase is a big looming pressure on every property developer till the project starts selling successfully.  Many real estate developers have started getting into joint venture developments with land owners to cut their investments into land so that they can use that money on construction and turn around the project in a much quicker time frame. It also means that the interest that they pay reduces big time. All these factors collectively result ina much healthier bottom line and it is the perfect scenario for a real estate developer and also for the land owner.

Although the JV developments have been practised by many developers over the years, it gained in fame when developers like Nitesh Estates based in Bangalore successfully developed and delivered projects that were born out of Joint Ventures with land owners.

Subsequently big real estate brands like Tata Housing Ltd and Godrej Properties started adopting this strategy and they have delivered some very good realty projects across the country. This is the ideal situation especially when the real estate selling market is slow. Since the major cost is cut down the developers can spend more in construction as well as marketing the real estate projects.

However there are many big names in the property development market that still prefer to business the old school way. Amonst the biggest ones is the Lodha Group. This company has been on a land buying spree not only in India but also in super affluent locations like London. The reason is that if you are cash rich you can purchase a land outright at a much discounted price and you do not need to share the profits with the land owner. In case of a joint venture you are bound to deliver as per the agreement with the Land owner.