Spot The Best Property Investments With Technical Due Diligence
If you’ve got a hand in the commercial property market, now must feel like a frenetic mix of instability and opportunity. A strange cocktail of risk and reward. On balance, there seem to be a number of reasons that this is the case.
- Property firms are keeping a close eye on the market and trying to seize promising opportunities.
- Headlines tell us on a daily basis that prices are falling.
- Owners are hasty to offload at a discount to cover their arrears.
- Investors are always hungry to secure a bargain before the trend moves on.
Of course, this trend seems frenzied further by COVID-19. The pandemic market left us expecting a flux of assets and downing prices. Just as would-be homebuyers are hoping.
Overall, there is a noticeable uptick in investor demand for quality properties in strategic development, hub or CBD locations. Particularly in the industrial and retail space. A trend we expect will continue as the initial impact of COVID wanes.
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Emerging property trends
Sentiment from within the industry agrees that ‘the prevailing slower market’s environment will give investors who have a smart mind impetus to buy the properties that are able to compete strongly in the future.’
Property owners have used this time to undertake medium to long-term capital upgrade strategies to ensure the longevity and value of their assets in a post-COVID environment. Many believe these properties present strong investment potential. However, the viability of any individual property is not as clear.
Herein lies the problem. Which opportunities are worth taking? And which have the investment potential of warm porridge?
Anyone with a chance is looking to buy into commercial property before the looming upswing seeks to restore balance. The only problem is, moving too fast is likely to cause a lot of pain down the line.
How do you avoid consequences, liabilities or shortfalls in the longer term?
Technical due diligence
The proverbial Berocca to the post-acquisition hangover is technical due diligence. Technical due diligence is classified as ‘an investigative survey performed by prospective investors during the pre-investment stage of a product or property… That aims to provide insight into the costs and risks involved in the acquisition or sales transaction.’
Broadly speaking, due diligence takes in a wealth of considerations. It weighs up legal, environmental, risk, technical and financial factors to give an overall view of the viability of the purchase.
Hendry understands the need for accurate and timely technical reports on the condition, quality and compliance of buildings and their underlying elements. In fact, it is an essential component in making an informed acquisition, disposal or property management decision.
Choosing a practitioner: Doing your (technical) due diligence
Property owners and developers must partner with a pragmatic and commercially-orientated property expert when embarking on a physical due-diligence process.
As experts in technical matters across the whole-of-life of assets, we are positioned to deliver technical due diligence audits. Our audits deliver definitive data on asset health, compliance and fitness for purpose. With this audit, investors and owners understand if what they are getting is value for money or if the risks outweigh the benefit.
The resulting knowledge and understanding of assets throughout their lifecycle provides informed property risk analysis and investment decisions. For Hendry, we’re proud of our zero-claim history, spanning over 35 years as a provider of technical due diligence and building compliance services.
Staying apart, together
Space usage is going to change. Compliance is also taking a new shape. Post-COVID, we are seeing a spotlight on health, safety and environmentally sound buildings.
Maddocks Law advises that you should determine ‘if the current premises is appropriate for social distancing and new working requirements. What has worked in the past may not be appropriate going forward.’
Deloitte, in a recent study, also pointed out that ‘during the due diligence process, it will be necessary to consider aspects of the “new normal”, which means differentiating which factors do not represent perpetuity from those “came to stay” and will permanently impact the company.’
A good practitioner ensures that these factors are considered. Particularly when providing their assessment and recommendations for a commercially-viable acquisition and long-term operation.
Get technical due diligence advice you can trust
Through boom and bust, nothing is a better guarantee than doing your homework. As a national consultancy, Hendry has the capability and resources required to service your due diligence needs across Australia. For all your NCC compliance, property risk, accessibility and inclusion needs. As well as your strategic asset management projects.