Metrium Group offers an efficient form of cooperation between a developer and a real estate agent: establishment of a joint venture, provided that the Owner (or a developer) will always have the majority interest and Metrium Group will have the minority interest in the joint venture’s equity. The established joint venture will serve as a professional sales department responsible for the entire scope of work: from the «creation of product» to registration of ownership rights.
This offer of Metrium Group is valuable to any developer if:
- He has recently entered the residential construction market;
- he is going to introduce or has just introduced its projects to the market;
- his portfolio includes one or two relatively large development sites (over 100,000 square meters) or a number of development sites (30,000-40,000 square meters each);
- he does not have its own sales department;
- he has a sales department but would like to increase efficiency of its operation;
- it operates in the market of new developments in Moscow or localities near Moscow or in the market of countryside real estate.
ADVANTAGES OF METRIUM-DEVELOPER JOINT VENTURE
First, the joint venture allows the developer to recover part of its expenses. Currently, average commission charged by a real estate agent is 3-5% of the transaction net amount (with 4-7% for countryside real estate property). The joint venture gives a developer the possibility to recover a part of those expenses according to distribution of shares between members of the joint venture. In addition, the developer gets an additional source of income from registration of ownership rights, which developers usually have to leave to real estate agencies or companies specialized in registration of ownership rights.
Second, a joint venture allows parties to significantly reduce costs across the board. In real life, developers generally have no reasons to maintain full-scale high quality analytic, consulting, sales departments, etc., because it is not their line of business. Thanks to a working joint venture, a developer can invest less in an efficient management of sales on a “turn-key” basis: each joint venture has its own sales representatives and deals with only one specific project for implementation of which it was established.
Third, the joint venture makes the sales process completely controlled and manageable. Real estate agencies have main income from the sales commissions. There may be situations where it becomes economically impractical for real estate agencies to sell leftovers of a real estate property. As a result, the Developer faces a risk to be left alone with the unsold property and many potential conflicts with unsatisfied buyers. With a joint venture it is completely impossible: joint responsibility means cooperation from the start to the end of the project.
Fourth, all risks relating to registration of ownership rights and other legal aspects will remain inside an entity which in under full control of the developer. Every project during its life cycle passes through a number of stages each of which has its own details, features and requirements, and this fact makes knowledge and experience of a partner real estate agent invaluable especially for beginners in development and construction business.
And finally, having a joint venture, the ultimate buyers will enjoy individual approach and increased attention, absolutely justified and fair prices based on a large-scale analytics, as well as transparency of deals. Further, the Developer will have not only intellectual and managerial support and fully established sales system for its construction project, but also sustainable positive image of a solid, professional and reliable player on the real estate market.