The real estate sector in Cyprus is a pillar of economic growth, attracting both domestic and international investors.
Over the past years, Joint Ventures have become a favoured structure for undertaking real estate projects in Cyprus, allowing both international and local landowners or land developers to work together and combine resources, expertise and capital to develop real estate projects.
Real Estate Joint Ventures can take the form of:
- A newly established company in which each party holds shares based on their investment or contribution. This option is most common in large-scale real estate projects.
- A registered partnership, which specifies the rights and responsibilities of each partner.
- Parties may also choose to work together on the basis of a commercial agreement which outlines the rights and duties of each party, without establishing a separate legal entity.
Key Legal Considerations:
Joint Venture Agreement: The parties to a Joint Venture usually enter into a Joint Venture Agreement, a document which outlines the roles and responsibilities of each party, includes details of the real estate project, the management structure, dispute resolution procedures and an exit strategy. This may take the format of a shareholders’ agreement or a partnership agreement.
Due Diligence: Before entering into any Joint Venture, it is important to conduct a thorough due diligence to assess any potential risks and benefits and particularly as regards the underlying land, to ensure that this is free of encumbrances or other burdens.
Regulatory Requirements: Real estate projects require approval from the Cyprus authorities, including the Cyprus Department of Lands and Surveys and the Town Planning and Housing Authorities.
Banking Requirements: If the parties intend to transfer funds from abroad, it is crucial to coordinate the transfer and ensure compliance with all banking requirements and procedures.
Key Advantages of Using a Cyprus Company for a Joint Venture in Land Development:
- The land is held directly under the company’s name, ensuring clarity of ownership and simplifying asset management.
- The rights and obligations of the company’s shareholders may be clearly defined in a shareholders’ agreement.
- The liability of the shareholders is limited to their contribution to the share capital, thus protecting their personal assets.
- It offers tax efficiency, including low corporate tax rate and exemption on dividends received, subject to conditions.
Our team can help you explore your options for a Joint Venture in Cyprus. Should you wish to find out more, contact us at:
📧 Email: info@paraschou.com.cy
📞 Tel: +357 22 622 262
🌐 Web: www.paraschou.com.cy
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