Preparing for a development partnership

Landowners may seek completed units, periodic income, a cash settlement or a continuing ownership interest. Developers may prefer a defined sales programme and an early recovery of capital. Funding partners may require scheduled repayments, security and limits on additional borrowing. These preferences can produce very different projects on the same land.

A proposal should specify the target users, expected development form, delivery sequence and route to income. Apartments for owner occupation, rental housing, serviced offices and logistics facilities have different absorption patterns and management requirements. A desirable district does not establish demand for every product that could be built there.

In Abuja, the analysis might test whether proposed unit sizes match the purchasing capacity of the intended customers. In Lagos, it might examine access, drainage, commuting patterns and operating charges for a particular location. Elsewhere, a project may depend on local employment or institutional demand. Those are questions for site-specific research rather than conclusions that can be drawn from a national housing narrative.

Market testing should identify achievable prices or rents, competing supply, likely sales pace and evidence of customer capacity. Expressions of interest should be distinguished from contracts and collected funds. A project that sells on paper can still face a cash shortfall during construction.

The site investigation should cover the rights available for contribution, seller or landowner authority, occupation, boundaries, physical conditions, access and the planning route. Counsel, surveyors and technical advisers need to examine the elements within their competence. Unresolved matters should become explicit conditions of proceeding, with responsibility assigned for resolving them.

Development potential is particularly sensitive to permitted use and scale. New York City's Zoning Resolution regulates land use and development through district-specific provisions, including rules on building bulk and parking. The commercial lesson for a Nigerian appraisal is to model a scheme against the applicable approvals and restrictions, rather than assume that a concept drawing establishes a right to build it. [6]

Utilities and infrastructure also influence the feasible scheme. A site may need additional access works, drainage, power equipment, water infrastructure or remediation. Those expenditures belong in the project budget even when the visible building design has already been costed.

Phasing can improve capital efficiency, but only if each phase is workable. Early purchasers may depend on infrastructure planned for a later stage. The feasibility assessment should establish which works must be completed first, how common facilities are funded and what obligations survive the delivery of individual units.

Land value should be supported by an independent assessment suited to the agreed purpose. A landowner's preferred selling price, the value of land as contributed capital and the price a project can afford are related questions with potentially different answers. The basis of the agreed contribution should be documented.

Developer contributions also need definition. Technical services, management, cash equity and guarantees should be identified separately. A development fee compensates services; an equity return rewards capital and risk. If both are proposed, the financial model should show both so that the same contribution is not rewarded twice without an express commercial agreement.

The capital partner's position requires similar clarity. Debt, ordinary equity and preferred equity have different repayment and loss characteristics. A promise of a fixed return should be tested against the cash available to meet it. The Nigerian stock market provides a useful reference point for opportunity cost: capital committed to a development is unavailable for other uses, including listed securities, but headline stock-market gains cannot substitute for a project-specific funding assessment.

A feasibility model should show when money is needed and when receipts are expected. Land-related expenditure, design, approvals, infrastructure, construction, professional costs, marketing, finance charges and taxes require appropriate treatment. A contingency should be tied to identified uncertainty and reviewed as design and procurement progress.

An illustrative project might require ₦800 million of expenditure before sales collections become sufficient to fund the remaining works. If committed funding covers only ₦600 million, a forecast accounting profit does not fill the ₦200 million gap. The parties need additional committed capital, a revised sequence or a smaller project. These figures are hypothetical and demonstrate a funding question, not Nigerian market costs.

Currency exposure warrants its own assessment. Egypt's March 2024 move to a flexible exchange-rate regime, discussed in the IMF's 2025 review, illustrates how foreign-exchange conditions can alter project economics. For a Nigerian development using imported equipment or materials, the practical application is to identify the currency of costs and receipts and test adverse movements. An Egyptian reform is context, not a prediction of Nigerian currency behaviour. [7]

The model should test delayed approvals, construction overruns, slower sales and weaker prices, including combinations of those events. The resulting cash requirement should then be compared with funding that is actually available. A partner's capacity to provide further money matters as much as willingness expressed in a meeting.

Saudi Arabia's off-plan framework provides a concrete example of project funding controls. REGA's implementing regulations require a separate escrow account for each project, restrict withdrawals to project purposes and provide for approval of withdrawal requests by the consulting firm and chartered accountant. Such controls do not guarantee success, but they show how funding architecture can support accountability. A Nigerian arrangement requires locally valid documentation and suitable banking arrangements. [8]

Before a development partnership is concluded, the parties should therefore have an agreed concept, a tested appraisal, a defined contribution schedule, credible funding and a documented route through outstanding approvals. A dated decision record should identify unresolved issues and the consequence of failure to resolve them.

Preparation succeeds when the project remains understandable under less favourable assumptions. That foundation allows the partnership agreement to govern a viable undertaking and gives each participant a reasoned basis for accepting the obligations ahead.