For a construction-development project, land purchase transactions with us generally happen in two ways: cash payment or barter (exchange of project spaces). Essentially, this is equivalent to global market transactions where companies deal in cash or stock swaps.
The difference between the two transaction versions lies in the risk factor and its cost. When an investor/developer buys land, the return on investment is crucial. If the cash condition provides a good return compared to the value of the spaces to be transferred, then buying with cash is a more rational decision.
However, there’s a risk factor regarding the value of the spaces to be transferred. In barter transactions, this risk is transferred to the landowner in exchange for appropriate compensation – the total expected value of the barter is generally much higher compared to cash
7 responses to “Cash or Barter – Land Acquisition”
[…] Most brokers talk to us about the price per square meter of land, which is an insignificant figure by itself—the weight of the land in revenue depends on both the K2 coefficient and specific location prices. Moreover, the land contract impacts two important components: 1. The scale of the invested capital in the project, and 2. The portion of sales risks transferred to the landowner. You can find more on this topic here: Cash vs Barter. […]