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Real Estate Due Diligence Offers Nearly 300 Mn Sqft Commercial Office Opportunities: Colliers

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There is a strong pipeline of office buildings in the top-six cities — Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune — for the next 2-3 years, with about 180 million sqft of Grade-A office stock in various stages of construction, according to a report by Colliers India. It added that these top cities have Grade-A office buildings of about 120 million sqft 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,” Colliers said in its report titled ‘Technical Due Diligence: Risk-proofing Realty’.

The report showed how due diligence can help various stakeholders take precautions to safeguard their investments. “It (the report) ensured that a property is developed as per prescribed norms at a time when there is increased focus on aspects related to sustainability (ESG) and health and wellness. The assessment further provides a pathway to reduce uncertainties and maximise the potential profitability of a project,” Colliers said.

Jatin Shah, managing director (technical due diligence) of Colliers India, said, “Investments in real estate are growing, with increased traction from global investors. In the past five years, foreign capital flows in real estate jumped 3 times to $24 billion, compared to the preceding five-year period.”

Shah added that 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 on a property is less than 0.3 per cent 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,” he said.

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.

Shah said, “The top-six cities have about 120 million 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.”

He added that 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.

Vimal Nadar, senior director (research) of Colliers India, said, “Post-COVID-19 developers and investors have become more cognisant about the efficiency of the project. It has become pivotal for them to understand the associated risks and upsides of any prospective project. Stakeholders can risk-proof their projects by making a small investment in due diligence and maximise their returns on investments.”

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