Recent Trends in Technical Due Diligence
Is your ‘too good to be true’ deal really sustainable ?
Lack of Capital post GFC has lead to a significant neglect of R&M and Capex spend.
Having worked on property due diligence valued over $10B since the GFC, Napier & Blakeley have seen only nominal spend on upkeep compared with previous years.
Risk of Non-Compliance (i) 
During this period the increasing trend has been a notable reduction of Repair and Maintenance (R&M) and Capital Expenditure (Capex) budgets. Whilst this strategy may have been necessary in some circumstances e.g. postponement of non-essential Capex, we have found too commonly evidence of non-compliance regarding statutory maintenance such as testing, auditing and reporting of essential safety measures and fire safety systems.
Reduced Life Expectancy and Premature Capex
Recent technical due diligence and condition assessments have also found that the lack of R&M and Capex budgets for economic life driven plant and equipment overhauls and refurbishments has resulted in increased short and medium term Capex.
How the energy disclosure is to impact on the Aussie property market
Australia will start requiring landlords to disclose energy efficiency ratings for their office buildings when leasing or selling from the start of November. Nearly a third of the Australian office market is currently rated for energy efficiency by the government and the new legislation will likely have an impact on valuations and create a push for upgrading efficiency. Here are some questions and answers on how the new regulation works, how foreign investors and REITs will be affected, and what implications the new rules could have on the property market.
How do the new rules work ?
Sellers or lessors of office space of 2,000 sq metre (21,530 sq ft) or more will have to disclose an up-to-date energy efficiency rating. Starting from Nov. 1, owners will need an energy rating from the National Australian Built Environment Rating System (NABERS) when leasing or selling. When putting properties on the market, advertisments should include the ratings. The NABERS rating measures energy performance on a scale of 1 to 5 stars with the median market performance currently at 2.5 stars.
