UAE is the world’s most rewarding real estate market. To make maximum profit, you should opt for technical due diligence of your desired property before spilling your cash.
If you are an investor or someone looking to get the most out of the real estate sector, the UAE market is your best bet. The region is tax-free, safe to live in, and home to more than 200 different nationalities. Hence, the ever-growing UAE residential sector is forecasting a CAGR of 8% during 2022-2027. However, to make the right decision, you need the right technical due diligence.
What is a Technical Due Diligence?
Technical Due diligence is a process that determines a property’s actual worth by analyzing its condition, structure, documentation, utilities, and environmental risks. It is an integral part of any real estate deal.
Technical due diligence identifies the potential benefits and risk factors. You can also estimate long-term ROI on your investment. Land Sterling residential valuation team delivers quality services across the Middle East, North Africa, and beyond. Our valuation team provides residential valuation services through competence, experience, and excellence. Above all, our team delivers a fully-fledged valuation solution package in line with international standards and best practices.
Importance of Technical Due Diligence
With technical due diligence, you get a reality check about any building or property. The latest practices and methods are used to assess building defects, performance, and possibilities for improvement. In a high-financing sector like real estate, you don’t want to spend money before a detailed due diligence analysis.
A good technical diligence report provides the following information
- Viability of property for the intended purpose.
- Any downsides of the building or its whereabouts.
- Possibilities of Future improvements and their impact on the overall worth.
- Conformity between documentation and offered site.
- Estimation of future running cost and associated liabilities concerning long-term profit.
- The legal ramifications, environmental risks, and all factors associated with a possible agreement.
What are the Key Factors to Consider for Real Estate Technical Due Diligence?
Some important factors make the foundation blocks of any real estate technical due diligence. For a quality report, you should check all these boxes for a comprehensive analysis.
The factors include:
Real Estate Site Condition
When we talk about site condition, it isn’t only limited to its physical appearance. A site condition analysis should evaluate its location, current price, and future probabilities. It should also determine the defects to determine its actual worth.
Another thing to consider is an improvement. With the right adjustments, you can increase a property’s worth by manifolds. You can build customer interest by adding a contemporary outlook and the latest features
Equipment and Systems
Another important thing is the analysis of the building structure, engineering design, and installed system. They determine its longevity and sustainability. If the quality of used materials (mainly cement, concrete, steel, wood, and glass) can withstand the test of time, it will increase its value.
Utilities
The building inspector should analyze the availability of basic utilities. In UAE, like all around the world, it plays a key role in cost estimation. The utility assessment is particularly important for people looking to move into a new house.
Environmental conditions
The authorities in UAE are quite big on eco-friendly housing. Environmental analysis should investigate all the environmental risks and hazards associated with a property.
The due diligence of a building should investigate proximity to sensitive habitats, safe diffusion of hazardous materials, possible underground water contamination, and soil conditions. With more emphasis on global warming, this aspect is only going to get bigger now.
How to conduct Technical Due Diligence on a property?
Since we have discussed in detail the importance and associated key factors with technical due diligence, let’s move toward the crux now.
In this section, we shall explain the complete procedure for technical due diligence of any property. However, before that, please note that it isn’t a nonprofessional job. You should always hire qualified professionals for that.
The procedure involves these steps:
- For TDD analysis, a surveyor must develop a sound understanding of all real estate standards and codes applicable in the UAE.
- After that, comes the physical inspection of the site. In that, the surveyor should take notes about the building, structure, surroundings, utilities, and probable defects. This gives primary data for evaluation.
- After on-field analysis, he should analyze the pre-existing documents and certifications of the building. This will determine the degree of conformity between documents and actual property.
- In case of any major deviation, you should ask the seller for an explanation. If the answer isn’t satisfactory, it will have a direct impact on valuation.
- After that, the surveyor should produce a written comprehensive due diligence report. The report should detail the current condition, actual worth, and future forecast of the property.
Conclusion
Technical due diligence means complete inspection of any real estate property. A TDD report gives you a clear indication of a property’s current condition, location, defects, and longevity. Based on that, you can make the right decision about its current and long-term commercial value. In real estate, any miscalculation can prove costly. So, always hire a credible TDD service before any real estate transaction.
Land Sterling has an experience of more than 100 years of real estate due diligence. With vast experience in the Middle East, North Africa, and Europe, we can evaluate any property in UAE as per International standards. Contact Land Sterling for an evaluation of your property.
Frequently Asked Questions
How long does a due diligence Process take?
It largely depends upon site sizes and the scope of the due diligence analysis as per mutual agreement. Normally, it takes 5-6 weeks to generate a TDD report.
What happens if you don’t do due diligence?
It puts all of your investments at risk. The property business is fickle and harsh at the same time. Any abrupt change can result in a substantial, at times, irrecoverable loss. So, it’s better to perform due diligence before any major financing.
Who pays for the due diligence?
Normally, the buyer pays for it. However, to place the right price tag, the seller can also pay a company to do a TDD analysis of his property.
