By ESV Sarah Bako
Housing delivery remains a critical issue in many developing economies in the world. As a result governments and the private sector are forced to seek collaborative models to fast track housing delivery for shared gains.
This realization has resulted in increased rate of joint venture arrangement involving the landowners, developers and financiers. This has not only boosted the housing sector, it has impacted the socio economic development of Nigeria in many ways
Housing Delivery is capital intensive. This reality enhances the imperative need for collaboration for greater results.
Joint Venture in housing sector is described as a common strategy,where land owners,developers, financiers and government agencies pool resources together to deliver efficiently on housing program by sharing risks and profits. They usually leverage on their complementary strengths for improved results.
Joint venture arrangement has manifestly become central mechanism to address housing shortages, particularly in urban areas where land scarcity, high construction costs and limited funding create barriers to large scale development.By pooling resources and expertise together,joint venture allows partners to deliver housing more efficiently than they could separately.
However, despite the advantages inherent in joint ventures arrangement in the housing sector, it has many encumbrances. The collaboration is usually hindered by obvious operational and structural challenges.
The challenges are frequently notable. They not only affect the viability of individual projects but also undermine broader efforts to improve housing affordability and supply, making the practical implementation of joint ventures in housing to often face significant obstacles that undermine their intended benefits.
Besides, disagreements over profit sharing,delays in regulatory approvals,poor project management and lack of transparency are among the recurring issues in joint venture business, impacting negatively on the overall outputs. Sometimes, the disagreements result in cost overruns, project delays and in some cases, complete abandonment.
From the beginning, it’s important to understand that
these challenges exist in a joint venture before going into it as a veritable avenue to prepare for its success. This is necessary to ensure that joint venture structures are designed efficiently from the start. In this way the housing delivery program would be developed to meet both commercial and social objectives.
Joint owners of housing projects must fashion out ways to grapple with the inherent challenges which usually border on governance, legal issues, decision making, selfishness and finances. For Nigeria to tackle evident housing deficits, joint venture arrangement in the housing sector must be administered effectively.
However, it’s important to identify demarcation dispute and difficulty of obtaining shared building permits and approvals from the appropriate authorities as some of the major sources of conflicts. It is, more so, when one party wants to exercise greater control and authority, perhaps, because it has made more financial commitments.
In situations like this, the subscribers are the worst hit. They are left in a fix until the joint owners resolve their differences, if they would be able to reconcile ultimately.
For effective management of the joint venture business, it’s advisable for the parties involved to develop a legally binding agreement, detailing the rights, responsibilities, and financial obligations of each member which must be consented to by all parties. Not only consenting, the agreement must be strictly adhered to by everyone during the period of project implementation.
