The requirements for expert property assessments within transactions are shifting noticeably. Alongside traditional evaluations of structural and technical condition, sustainability aspects are moving increasingly into the focus of institutional players and financing banks. According to DAVE, the association of leading owner-managed real estate consultancies in Germany, a property's future viability now decisively determines its eligibility for financing.
Sven Keussen, partner at DAVE, emphasises that lending today depends on significantly more parameters than in previous market phases. Besides criteria such as location, type of use, earnings capacity and structural fabric, the question of how future-proof a building is positioned is gaining weight. ESG aspects are thus developing into an integral component of risk assessment and are transforming directly into economic risk factors.
Broadened risk focus for existing properties
For buyers and existing owners, this shift means that potential weaknesses must be identified and assessed at an early stage. This particularly concerns energy performance characteristics and the resulting capital expenditure requirements, as well as stricter technical and sustainability-related specifications. Older existing buildings in particular can face considerable modernisation expenditure. What matters is therefore not solely the condition at the time of purchase, but which measures will be required during the planned holding period and how these will affect operations and marketability.
Contemporary due diligence must take a forward-looking approach, as Thomas Portmann, Head of Transactional Services at DAVE partner Arcadis Germany, explains. Merely recording existing defects is no longer sufficient; transparency is needed regarding which future requirements a building will face and what costs will arise from them. As a technical consultant with over 100 employees across 13 German locations, Arcadis advises on around 400 projects each year across the entire property life cycle.
- —Transactional services including TDD, EDD and CDD
- —Advisory services in the fields of sustainability and asset management
- —Ongoing monitoring for financing credit institutions during loan disbursement
Interdisciplinary assessment creates transaction certainty
The traditional separation of individual assessment areas falls short, as technical condition, energy efficiency, modernisation requirements and regulatory specifications are closely linked. A technically functional building can still harbour significant risks if ecological criteria are ignored. Conversely, an early review of future measures makes it possible to price risks in line with the market and formulate viable financing strategies.
Credit institutions demand robust facts instead of sweeping ESG statements. In today's demanding market environment, transparency is considered a vital prerequisite for successful completions. Necessary investments do not necessarily diminish the appeal of a property; problems only arise when risks are identified too late or costs remain unquantifiable.
