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Joint Development Agreement: In Indian real estate, developers like Lodha, Prestige are building projects without purchasing land through GDA model. In this, the owners get ready flats, this provides great benefits to the developers as well as the land owners.
Nowadays, such a real estate business model is running in the real estate market which is no less than a boon for developers and land owners. For this, there is neither the tension of buying land, nor the fear of investing crores of rupees. This model is so smart that the developers are filling the coffers without emptying their pockets.
Actually, the name we are talking about is Joint Development Agreement or JDA. Joint Development Agreement (JDA) is a very preferred model in Indian real estate. This benefits not only the developers but also the land owner.
What is JDA?
This is a partnership-like agreement between the land owner and the builder i.e. developer. Suppose you own a land but you do not have the money or knowledge to develop that land. In such a situation, the developer has money and technology, but has to take a huge loan to buy the land. Both work together in JDA. The owner gives the land, the developer builds flats or shops on it. Then some part of the completed project, like 40-60 percent of the flats, goes to the owner. The developer sells the rest in the market and earns profit. There is neither the tension of land registry nor the need to borrow money to work on the land.
Developers get huge benefits
Earlier, the land owner used to spend billions of rupees in purchasing the land and if the project gets delayed or the market is down, then you do not have to bear the burden alone because the risk is distributed in JDA. The developer focuses only on construction, the rest is handled by the owner.
Due to this, capital is reduced, projects are built faster and sales increase. Market research shows that projects with JDA sell 20-30 percent faster because buyers get cheaper prices. Due to this, the sales of developers are increasing, because they are able to handle more projects and that too without investing any money. Take for example, in cities like Mumbai or Bengaluru, big builders like Lodha or Prestige are building high-rise towers using this model. The owner also benefits, because instead of cash, he gets ready flats, which he can rent or sell.
Why is this real estate model becoming so popular?
Actually, the risk in real estate was higher earlier. Now the partnership with JDA becomes stronger. Everything is clear in the legal agreement as to who will get what share, when will they get possession, what will be the timeline. If the developer does not complete the work, a penalty has to be paid. This brings transparency and reduces the chances of fraud. People are adopting this strategy even in small cities. According to a report, in 2025, 40 percent of new projects in India will run on JDA only. But also keep in mind that all this works well only when the agreement is strong. So get your agreement checked by a lawyer, find the right location and if you are a landowner, check the credibility of the developer. Apart from this, if you are a buyer then choose RERA registered project.
