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Technical Due Diligence

What is a Technical Due Diligence?

TECHNICAL DUE DILIGENCE IS THE PROCESS OF EVALUATING LAND, BUILDINGS OR PROJECTS INVOLVED IN A REAL ESTATE INVESTMENT.

A Technical Due Diligence is intended to determine the current status and future contingencies of a property, prior to the transfer of the same, with the aim of minimizing and limiting the risk in a real estate transaction. For this purpose, within the evaluation process, we carry out an exhaustive and thorough analysis of the possible risks, among others:

  • Compliance of the building or project with current regulations (at the time of design or current).
  • Study of the feasibility of a new use of the building.
  • Study of the condition and useful life of the existing construction elements and installations.
  • Estimation of the necessary costs for the use and/or exploitation of the property, adjusted to the current use and market.
  • Knowledge of the current and future costs for adequate maintenance.

The main objectives of a Technical Due Diligence are the following:

  • To know the state of the property under study, making a detailed study of the constructive elements and facilities that compose it, identifying the defects, performances and useful life of each one of them.
  • To confirm the suitability of the property for the intended use.
  • To know the initial necessary expenses, as well as the possible future expenses.
  • Provide a solid basis for investment negotiations.
  • Obtain a level of protection for buyers/operators.

Who needs Technical Due Diligence?

BUYERS WHO WANT TO UNDERSTAND THE RISKS OF THEIR INVESTMENT AND IDENTIFY OPPORTUNITIES AND SELLERS WHO WANT TO ADDRESS POTENTIAL PROBLEMS IN THE SALE OF THE PROPERTY.

Technical Due Diligence offers the necessary information to avoid unforeseen costs and deadlines in a real estate investment, in addition to being a solid basis for negotiating the transfer of the property.

It is convenient for buyers, to know the current state of the property to be acquiredand the physical characteristics of the property prior to its purchase. This will allow estimating the costs necessary to adapt or improve the property, in order to put it into use or get an up-grade on it, and avoid surprises later on.

It will also enable sellers to give to give greater credibility to third parties regarding the current situation of the property.as well as the technical feasibility of the property for different uses.

Properties for which we perform Technical Due Diligence

  • Undeveloped land: We proceed to carry out the study of the land from the technical point of view and evaluating the urban situation of the same. You will obtain a report of the current status, possible uses and actions to be taken to improve the condition of the land.
  • Stopped work, unfinished work, work without operating licenses: We carry out an exhaustive study of the current state of the work, estimating the progress and work to be done to complete the work. We indicate the actions and requirements to obtain the operating licenses and thus to know the steps to be taken after obtaining the property.
  • Existing buildings intended for the same use: We evaluate the current state of the building, the useful life of the constructive systems and the facilities that compose it. We value the repairs to be made for its use, as well as possible improvements within the current market and the indicated use. We estimate the maintenance works and replacements of constructive systems and installations according to their useful life.
  • Existing buildings intended for change of use and/or modification projects: We evaluate the current state of the building, the useful life of the construction systems and the facilities that compose it. We will study the feasibility of the desired project. We value the reforms to be carried out for its use. We will estimate the prices of improvement and modifications of the indicated project. We estimate the maintenance works and substitutions of constructive systems and installations according to their useful life.

In short, he knows the object in depth, explores options and opportunities and makes informed decisions with confidence and transparency.

gloval What makes Gloval different?

TECHNICIANS WITH EXTENSIVE EXPERIENCE AND THE NECESSARY QUALIFICATIONS IN DIFFERENT AREAS

separador-ho

We adapt to the needs of each client, providing a personalized service. We delve into the aspects that most interest you, seeking to answer the most common questions that arise: What is the current status of the project? Are there any problems with authorizations, legalizations or licenses? What is the documentation available for the project? What are the main construction elements and installations of the building and in what condition are they? Is there any possibility of implementing improvements? What is the documentation available for the project? What are the main constructive elements and installations of the building and in what condition are they? Is there a possibility of implementing improvements? etc.

Let’s have a chat

gloval What makes Gloval different?

TECHNICIANS WITH EXTENSIVE EXPERIENCE AND THE NECESSARY QUALIFICATIONS IN DIFFERENT AREAS

Let’s have a chat
separador-vertical

We adapt to the needs of each client, providing a personalized service. We delve into the aspects that most interest you, seeking to answer the most common questions that arise: What is the current status of the project? Are there any problems with authorizations, legalizations or licenses? What is the documentation available for the project? What are the main construction elements and installations of the building and in what condition are they? Is there any possibility of implementing improvements? What is the documentation available for the project? What are the main constructive elements and installations of the building and in what condition are they? Is there a possibility of implementing improvements? etc.

How do we do a Technical Due Diligence?

WE PRODUCE A COMPLETE AND EXHAUSTIVE TECHNICAL REPORT, AIMING FOR ORDER, SIMPLICITY AND VISUAL CHARACTER

Our intervention as Technical Due Diligence translates into the preparation of a report that meets the client’s needs, following the points detailed below:

      • Hiring: We stand out for offering personalized and tailored customer service at competitive prices.
      • Documentation: We request and carry out a detailed study of all the documentation received, we assess the lack of documents and the future casuistry in your case.
      • Visual inspection: We inspect the building in depth, both construction systems and installations. We perform a discreet inspection and avoid inconveniences with our presence in the building.
      • Risk assessment: A detailed analysis of risks and anomalies detected in the documentation or during the visit is carried out, as well as an evaluation of the useful life of the construction elements and installations.
      • CAPEX: We assess all the anomalies and risks detected, detailing the actions to be taken in a maximum period of 10 years. Thus offering a precise economic estimate.
      • Our report: All of the above is expressed in a document where simplicity, order and clarity are paramount.

1. Documentation

• We will check that all the obligatory documentation according to the state, autonomic and sectorial regulations exists and is available and we will advise you on the necessary documentation for the final compression of the property from the constructive-architectural point of view as of facilities.

• We will check that the documents provided are in force and correspond to the reality of the property.

2. Inspection

• From the information available in the project documentation and the possible main measurements taken during the visit to the building, we will carry out a check and control of the surfaces.

• The revisions are carried out according to checklists, insisting on those points whose maintenance or replacement are more burdensome, detecting possible infractions, as well as constructive pathologies or constructive damages in the building.

3. Costs

• Based on the Due Diligence analysis, we will propose a 10-year Capex plan based on the review of the existing documentation, the visit, the real conditions of the property and the application of useful lives and market prices.

• Likewise, we will prepare an initial Capex estimation (reset to 0) that values the necessary cost to adapt the state of the asset to the optimal conditions, based on the applicable regulations and the investor's requirements.

4. Report

• Once the inspection has been carried out and the information obtained from the documentation has been compared with what was verified during the visit to the property, we will draft the report according to the defined scope, highlighting the anomalies detected.

• Finally, we will send you the detailed Technical Due Diligence report, and our team of professionals will be at your disposal to answer any questions you may have.

Frequently Asked Questions

For a good Technical Due Diligence, we need accurate, technical knowledge of the building processes within the real-estate sector. In this regard, the experience and sheer volume of all the appraisals made by GLOVAL make us an expert company in this type of appraisals. The qualified staff who is devoted to preparing this type of appraisal reports depending on the type and use of the property is made up of architects, architectural technicians, construction engineers and agricultural engineers.

It is not mandatory, but it does provide the opinion of a third party who is not involved in the sale/purchase regarding correct and accurate information on the current situation of the property and other aspects like regulatory compliance, deficiencies, suitability of the project, current and future costs, etc.

In order to carry out a Technical Due Diligence report, it is considered advisable to have the following documentation (when available):

      • Execution/Rehabilitation Project. Construction budget. Memory of qualities
      • Building Book
      • Updated plan of the property
      • Inventory of installations
      • Documentation accrediting the legality of the installations.
      • Maintenance carried out, both constructive and installations. Contracts in force.
      • Budgets of works and reforms carried out. Supporting documentation and supporting documents.
      • Environmental documentation (if applicable)
      • Licenses
      • Land registry statement
      • IBIS
      • Other documentation considered to be of interest for the correct performance of the commissioned work.

By way of example, the index used in the Technical Due Diligence reports, which is adapted to the type of property analyzed, is as follows:

      • Object of the order
      • Documentation provided
      • Initial data
      • Description of the building
      • Urban planning licenses
      • State of the building’s constructive elements
      • Condition of the installations
      • Licenses of the installations
      • Capex

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