A Different Way to Realise the Potential of Your Property

A landowner with a suitable development site may have alternatives to an immediate sale.

One option is to participate in the proposed development through a joint venture or another agreed commercial structure.

This can allow the landowner to contribute the property while Arc Urban Developments coordinates the development process and other parties contribute funding, security, expertise or services as required.

A joint venture is not suitable for every property or every owner. It involves legal, financial, taxation, market and construction risks and must be carefully assessed and documented.

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What Is a Property Development Joint Venture?

A joint venture is a commercial arrangement in which two or more parties agree to contribute different resources toward a specific project.

Depending on the arrangement, contributions may include:

Land.
Cash.
Borrowing capacity or security.
Development expertise.
Project coordination.
Guarantees.
Professional costs.
Time and management responsibility.

The parties agree in advance how the project will operate, how decisions will be made and how the eventual proceeds will be distributed.

The appropriate structure may be a contractual joint venture, company, unit trust, partnership or another structure recommended by the parties’ legal and taxation advisers.

What Could the Outcome Look Like?

Depending on the property, finance, project structure and personal circumstances of the landowner, possible strategies may include:

Selling all completed dwellings.
Retaining one or more completed dwellings.
Selling some dwellings and retaining others.
Receiving agreed proceeds under the project arrangement.
Remaining in the existing home until a defined stage.
Moving into a completed dwelling, where the design and legal structure allow.

These options must be considered before design and legal arrangements are finalised.

No outcome should be presented as automatically more tax-effective. Capital gains tax, GST, income tax, duty and other taxation consequences may apply differently depending on the structure and circumstances. Independent taxation advice is essential.

How an Arc Urban Developments Joint Venture May Progress

Step 1 — Confidential initial discussion : We discuss the property, ownership, mortgage position, personal objectives and preferred outcome.

Step 2 — Preliminary site assessment: Arc Urban Developments completes an initial review of the property and apparent development considerations.

Step 3 — Consultant investigations: Where appropriate, professional planning, surveying, design, engineering, market or costing advice is obtained.

Step 4 — Detailed feasibility: The proposed project is assessed using realistic allowances for professional fees, approvals, construction, finance, holding costs, tax, sales, contingencies and anticipated end values.

Step 5 — Commercial proposal: If the project appears viable, the proposed contributions, responsibilities and distribution arrangements are discussed.

Step 6 — Independent advice and documentation: Each party appoints independent legal, financial and taxation advisers. Formal documents are prepared before the parties become committed.

Step 7 — Approval and finance: The project proceeds through the required approval and funding process.

Step 8 — Construction: Subject to approval and finance, construction is undertaken by the appointed builder and coordinated under the agreed project arrangements.

Step 9 — Completion and distribution: The dwellings are sold or retained in accordance with the agreed strategy. Project proceeds are applied and distributed according to the governing documents.

What Must Be Agreed Before Proceeding?

A robust agreement should address at least:

The parties and ownership structure.
Agreed land value.
Cash contributions.
Borrowing and security arrangements.
Personal or corporate guarantees.
Responsibility for professional and approval costs.
Responsibility for cost overruns.
Arc Urban Developments’ role and remuneration.
Decision-making authority.
Project reporting.
Approval and finance conditions.
Construction contract approval.
Changes to scope or design.
Sale prices and appointment of selling agents.
Retention of completed dwellings.
Tax and GST treatment.
Insurance.
Default and dispute resolution.
Death, incapacity or insolvency of a party.
Termination rights.
Distribution of proceeds.
Project records and bank accounts.

**No party should enter a joint venture based only on website information or a verbal understanding.

Understanding Development Risk

Property development can produce attractive outcomes, but it also carries material risks.

These may include:

Planning approval being refused or delayed.
A lower development yield than expected.
Consultant or approval costs increasing.
Construction pricing exceeding the original estimate.
Latent site conditions.
Builder delay, insolvency or contractual disputes.
Interest rates or lending conditions changing.
Additional equity being required.
Sales taking longer than expected.
Completed values being lower than forecast.
Taxation outcomes differing from assumptions.
Changes to legislation or planning controls.
Disagreement between project participants.

Our process is designed to identify and manage risk, not to claim that risk can be removed.

Is a Joint Venture Right for You?

A joint venture may be worth exploring when:

The property appears to have genuine development potential.
The owner is willing to accept development risk.
The owner understands that the process may take a substantial period.
The owner is prepared to receive independent professional advice.
The owner and Arc Urban Developments can agree on a fair commercial structure.
The required finance and security can be obtained.
The likely project margin reasonably compensates the parties for the risks involved.

A sale may remain the better option for an owner who values certainty, immediate settlement and freedom from development risk.

Begin With an Initial Assessment

Send us the property address and tell us what you hope to achieve. We can complete an initial review before discussing whether a joint venture warrants further investigation.