Real Estate due diligence can claim a slice of the 300 mn sq ft pie of existing and upcoming commercial office buildings. The top 6 cities (Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune) are seeing a strong pipeline of office buildings in the next 2-3 years, with about 180 mn sq ft of Grade-A office stock in various stages of construction. At the same time, these top cities have Grade-A office buildings of about 120 mn sq ft that can be refurbished. Developers and investors are seeking professional expertise to evaluate their upcoming projects and solutions for the upgradation of their existing ageing buildings, as per Colliers’ latest report “Technical Due Diligence: Risk-proofing Realty”.
Investments in real estate are growing, with increased traction from global investors. In the last five years, foreign capital flows in real estate jumped 3 times to USD 24 bn, compared to the preceding five-year period. As the country is seeing a spurt in investments, there is an increased demand for state-of-the-art real estate projects which are technically and operationally compliant.
The cost of conducting due diligence of a property is less than 0.3% of the project cost. As developers and investors venture into new geographies and asset classes, Due diligence can help them risk-proof their prospective projects. The benefits will outweigh the costs incurred as it can save the stakeholder from substantial loss of money, time, and legal hassles”, says Jatin Shah, Managing Director, Technical Due Diligence, Colliers India.
For under-construction buildings, developers, investors and even occupiers can avail of due diligence services to get a better return on investments, timely risk mitigation and greater transparency during the transaction process. The top six cities have about 120 mn sq ft of ageing Grade-A stock, which is more than 15 years old. Due diligence can help developers and landlords understand the scope of upgradation and achieve higher traction from occupiers, especially in the prime micro-markets of major cities. Due Diligence experts can provide developers and investors with recommendations to overhaul their older properties. Upgrading old office buildings will help in gaining more traction from occupiers, increase the value of the building with increased building longevity.
