How is land lease renewal conducted?

Different developers agree on various terms for extending land leases after the initial lease period ends.

A good practice for developers is a scheme where, upon lease expiration, independent land appraisers (at least three: two from interested parties and one independent) assess the market value of the land, and investors extend the lease at the average market price.

What happens if the landowner doesn’t want to extend the lease after the term ends?

If the contract obliges the landowner to make the first extension, neither he nor his relatives can cancel this contract. This is why legal support and Due Diligence are necessary before proceeding with the next steps in the investment process.

Typically, investors in a complex from a reliable developer have the priority right to extend the lease. In other words, if the landowner decides to extend the lease, they extend it to the investors in that complex. Statistics show that landowners usually proceed this way.

Sometimes, it is possible to agree with the landowner that the extension will be paid upfront at the current market price during the initial purchase, rather than after the first lease term expires.