Investment in real estate asset is high stakes for every stakeholder involved. To ensure a good transaction, an investor should examine the acquisition from all critical angles, like, financial, legal, technical, etc. Technical Due Diligence is an investigation and analysis of the technical aspects covering compliance to approvals, codes and complete audit of asset. This complex and multi-point review necessitates a stringent process and check to identify unknown risks during all stages.
The due diligence process not only requires a broad level investigation, but also entails separate topic specific investigations. Such investigations apart from potential risk identification, yield better chances of getting higher and positive returns from their investments.
What is a typical Technical Due Diligence process?
Step 1- Introduction: A technical due diligence commences by setting up a framework and communication protocols between stake holders. It is critical to remain available, being honest and open.
Step 2- Kick-off meeting: The kick-off meeting starts the process of a due diligence, where the requirements and detailed deliverables are agreed and deliberated between the parties, with confirmation on ‘Single Point of Contact’ and defining the dates/deadlines.
Step 3- Documentation / Data Collection: Before actually meeting in person or conducting on-site surveys, review of all the existing documentation and date, like approvals, information related to architecture, façade, structure and MEP is completed. The more we have a well-documented project, the better it is. This stage also opens up the need to have additional data for checks and expert to get prepared for subsequent stages.
Step 4- On Site Due Diligence/Parallel investigation calls: Usually for this, a meeting in person is a mandatory requirement, as investors prefer to know that the Project really functions or is shaping up the way it is planned/was documented. It is usually a 2-3 days session when respective experts dwell into different technical reviews to analyse real time.
Step 5- Follow up meetings: Often, a number of questions are raised post completion of Step 3 and Step 4. The responses require in-depth clarity, patient follow-ups and discussions. This period sometimes actions a lot of activity or infuses a wait and watch mode. However, it is an extremely important step.
Step 6- Report: The end result of the technical due diligence process is a detailed report, where all the risks, pros and cons are highlighted, and the overall conclusion is provided for the Investor.
Technical Due Diligence report provides an unbiased opinion to clients, for them to take informed decisions and maximise the potential of property.
