In this partnership, the venture partner must contribute 30% of the total project’s development budget, while Zenith, acting as the developer firm, covers the remainder through various funding sources. The price per square foot for this allocation will be established by Zenith and will closely correspond to the cost price of the project development.
Venture profit estimation
To provide comprehensive insights into the potential benefits, we are presenting a case study that considers both pessimistic and optimistic scenarios, examining the venture partner’s anticipated gains based on current market prices.
Case study
The provided example, with data as of February 2024, offers a detailed guide for investors interested in upscale residential property development, providing comprehensive details as follows:
- Location: Jumeirah Village Circle(JVC)
- Structure: G+3P+11
- Plot Value: 25,754,580 AED
- Saleable Area: 128,032 ft2
- Total Built-Up Area: 207,468 ft2
- GFA: 143,081 ft2
The cost breakdown for development is calculated at 904 AED/ft², outlined as follows:
Cost breakdown chart for development by Zenith
Land cost per build up area
180 AED / ft²
+
Construction
320 AED / ft²
+
Design & quality control
15 AED / ft²
+
Miscellaneous
15 AED / ft²
+
Management
25 AED / ft²
+
Luxurious Finishing & Adding Value
100 AED / ft²
+
VAT
15 AED / ft²
=
Luxurious Property
670 AED / ft² (Gross Area)
Converting gross cost to net cost by Adding 35%
Luxurious Property
904 AED / ft² (Net Area)
Based on the above chart, the marketing and agent commission fee of 110 AED will be added to 904 AED, resulting in a final price of 1014 AED/ft² for the net area.
Aligned with the market range, the estimated price for such luxurious projects is approximately 1710 AED/ft² (net area). Therefore:
- Total Cost Amount: 129,824,448 AED
- Total sale Amount: 218,934,720 AED
Hence, the venture partner will invest 30% of the total project’s development budget, which amounts to 38,947,334 AED. Consequently, the total sales for venture partner in the market will be as follows:
There are two perspectives, a pessimistic view (89% ROI) and an optimistic view (178% ROI), for calculating Venture Partners’ profitability as outlined below:
Optimistic Scenario: If the sale initiates while the Venture Partner has only met half of the total commitment, without any additional payment needed, the escrow account should be prepared at this point to commence the sale. Consequently, achieving a 178% ROI for the Venture Partner becomes feasible.
Pessimistic Scenario: If the sale begins after the venture partner has invested 100% of the total commitment.
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Venture Partnership
In this partnership, the venture partner must contribute 30% of the total project's development budget, while Zenith, acting as the developer firm, covers the remainder through various funding sources.
Parties Profit Shares
For the Venture Partner, their profit share will be determined by their commitment to invest in the development project, and they will be allocated 30% of the built-up area from the project. The price per square foot for this allocation will be established by Zenith and will closely correspond to the cost price of the project development.
Case study
The provided example, with data as of February 2024, offers a detailed guide for investors interested in upscale residential property development, providing comprehensive details as follows:
The cost breakdown for development is calculated at 904 AED/ft², outlined as follows:
- Location: Jumeirah Village Circle(JVC)
- Structure: G+3P+11
- Plot Value: 25,754,580 AED
- Saleable Area: 128,032 ft2
- Total Built-Up Area: 207,468 ft2
- GFA: 143,081 ft2
Cost breakdown chart for development by Zenith
Land cost per build up area
180 AED / ft²
Management
25 AED / ft²
Luxurious Property
670 AED / ft² (Gross Area)
+
+
Construction
320 AED / ft²
Luxurious Finishing & Adding
Value 100 AED / ft²
+
+
Design & quality control
15 AED / ft²
VAT
15 AED / ft²
Luxurious Property
904 AED / ft² (Net Area)
+
=
Miscellaneous
15 AED / ft²
Luxurious Property
670 AED / ft² (Gross Area)
Based on the above chart, the marketing and agent commission fee of 110 AED will be added to 904 AED, resulting in a final price of 1014 AED/ft² for the net area.
Aligned with the market range, the estimated price for such luxurious projects is approximately 1710 AED/ft² (net area). Therefore:
- Total Cost Amount: 129,824,448 AED
- Total sale Amount: 218,934,720 AED
Hence, the venture partner will invest 30% of the total project’s development budget, which amounts to 38,947,334 AED. Consequently, the total sales for venture partner in the market will be as follows:
There are two perspectives, a pessimistic view (89% ROI) and an optimistic view (178% ROI), for calculating Venture Partners’ profitability.
Optimistic Scenario
178% ROI
If the sale initiates while the Venture Partner has only met half of the total commitment, without any additional payment needed, the escrow account should be prepared at this point to commence the sale. Consequently, achieving a 178% ROI for the Venture Partner becomes feasible.
Pessimistic Scenario
89% ROI
If the sale begins after the venture partner has invested 100% of the total commitment.