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Technical Due Diligence Services for Retrofit Projects
Technical Due Diligence Services for Retrofit Projects

July 6, 2023

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When taking on a retrofit project, location remains a consistent determining factor for the market. This opens an opportunity for the developers to remodel and accordingly reposition the older assets.

 

Technical Due Diligence is an exceptional service offering pertinent to the audit of real estate assets. Whether it is a new project or the refurbishment of an old one, a critical evaluation that enables an informed decision-making process is essential. By scrutinizing the condition of properties, we are able to identify potential risks, highlight opportunities for improvement and pinpoint key factors that directly impact your investment strategy.

Apart from the comprehensive suite of services including contour services, geotechnical surveys, buildability analysis, technical audits, development strategy, E&S audits, etc., there is one more crucial TDD offering that isn’t highlighted enough – retrofit analysis. Let’s take a look at its importance and advantages.



The current prevailing economic factors and changing real estate market brings to the forefront the emerging trend of older buildings being remodelled to accommodate tenant requirements and changing usage patterns. Old real estate assets must be refurbished to keep up with the newly built Grade A assets.

When taking on a retrofit project, location remains a consistent determining factor for the market. This opens an opportunity for the developers to remodel and accordingly reposition the older assets. Upgradation or retrofit of a space typically will have several variables. Due analysis including but not limited to market study and technical feasibility should provide inputs for radical rethinking and making required decisions involving return on the investments.

A step-by-step process and careful audit of space helps to expand on experience. Once the audit is complete, a diligence report is presented to the client after thorough coordination and engagement with stakeholders at all levels. This report assists in making informed decisions. Typically, life cycle of mechanical, electrical, plumbing infrastructure and of façade systems is 20 years. Regular audits to independently analyse condition and performance of the system as such becomes necessary as the building ages. In a few cases, developers invest in the upgradation within 10 ~ 12 years span of initial occupancy, to maintain the value of the asset. Additionally, increasing performance of a building (leading to approx. 15% saving over base line efficiency) leads to operation cost saving for occupants, and this aligns the asset to prospective tenant demands.

In a way the decision process will keep going back to reconfirm whether the upgradation can generate a higher asset value. During the audit, the team typically continues to review the following:

 

Overall, the assessment is from a view of investor and/or owner. Repositioning exercise of an asset is a cost and as such, it is critical to understand drivers before investing on retrofit of existing buildings.

About the Author:

Jatin Shah | Chief Technical Officer - Project Management | India & MD - Technical Due Diligence | Colliers


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