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360 ° Technical Due Diligence Future-proofing investments

The future of the Real Estate market cannot be precisely predicted but what we do know is that the next generation buildings and assets will look different to those we see today. The Covid-19 pandemic has demonstrated like never before that we need to brace ourselves for new realities. The enormous ecological footprint of our buildings has attracted an additional price-tag due to new European financial regulations. Global trends in digitisation, e-mobility, healthy indoor environments along with new design factors are calling for new developments, adding pressure on existing assets which cannot cope with this transition and may end up as future "Stranded Assets". How can you foresee that your real estate investments will withstand the test of time and respond to ever-changing digital and environmental dynamics?

Source: UNEP, Statistisches Bundesamt | Defra and Government, Statistical Service (2019)

We have reached the tipping point...

Air and water pollution are of particular concern for the Netherlands, with the country's rivers becoming particularly polluted from agricultural and industrial activities. Heavy metals, organic compounds, nitrates and phosphates form a large part of this pollution problem. The country is gradually moving towards a 100 % Circular Economy and is taking steps to abide by the European Union's Green Deal. Such regulations have a major bearing on the built environment and new measures need to be in place to cope with the evolving dynamics.

Questions you grapple with before making an investment!

  • Is the building really "smart"?
  • How many electric vehicle (EV) charging poles can be installed?
  • How will my asset or portfolio be affected by the new EU taxonomy and upcoming sustainable finance regulations?
  • Can the Green Building Certification be upgraded?
  • What is the whole life carbon footprint of the building?

Technical Due Diligence Future-proof Check

Having a future-proof and resilient asset is on the agenda of a conscious risk manager during real-estate transactions. We support our clients in making the right decisions today for a sustainable tomorrow. This requires extending the Due Diligence perspective beyond "building fabric" to a 360 ° analysis. At Drees & Sommer, we conducted our first Technical Due Diligence (TDD) assessment 30 years ago, building a solid track record across Europe, the Middle East and China. Our experts draw upon the wealth of technical and real estate knowledge to assess complex projects and portfolios with strong technical and operational drivers. Within our interdisciplinary team, we have honed expertise to work on emerging real estate future trends in Smart Buildings, Electric Mobility, Circular Economy, Zero Carbon and Environmental, Social and Governance. We have launched five new modules to help you make the highest return on your investment.

We embrace a holistic and sustainable approach to future-proof our projects. All the services provided by us takes into consideration both economic and ecological concerns. We call this #theblueway.

MODULE 1: Digital Ready Check

Is Your Building Really 'Smart'?

While smart buildings are a current buzz in the real estate sector, the topic exposes investors to potential risks. Vendors may often claim that an asset is a Smart Building. Investors may find themselves grappling with questions: Is it really smart or just an ordinary building? ​If the building is not smart building ready, will it affect the future marketability? How much will it cost to make the building smart? Is the Smart Building concept watertight in terms of Cyber Security and Data Protection or will it make users susceptible?

​Our Approach

  • Benchmark and furnish information about the level of 'smartness'
  • Initial cost information
  • Digital Ready Check ensures whether central infrastructure allows the conversion into a smart building
  • Assessment on digitisation levels ​
  • Cost estimation of potential upgrades​
  • Customised questionnaire answered by the operator/owner with information from the TDD site-visit​
  • Comparative analysis of an existing building with requirements of a smart one​
  • Recommendation on essential measures with capital expenditure estimation

Your Added Value

  • Value for money​
  • Insight into future cost of upgrades​
  • Risk Assessment of Smart Building related issues like Cyber Security, Data Protection
  • Mitigation of these risks

MODULE 2: Electric Mobility

Electric mobility is a must-have technology for developing a clean and efficient transport system. With rapid urbanisation and emergence of megacities, electric mobility provides a high level of agility and cleaner emission trail. Though in its nascent stage, e-mobility has been identified as the future mode of transport and as a building block of sustainable mobility. Therefore, the digital infrastructures of tomorrow need to be prepared to provide for these battery operated transport systems. At Drees & Sommer Netherlands, we not only support our clients in identifying such modernisation requirements but also turn new opportunities based on trends into solid asset value.​

Our Approach

  • Assessment of available capacities and charging infrastructures on site​​
  • Off-site capacities evaluation with public utility provider
  • Charging facilities calculation within existing plant​
  • Analysis of extension possibilities of existing plant​
  • Evaluation of smart charging management solutions
  • Analysis of extension possibilities with additional transformers
  • Cost evaluation of upgrade measures

Your Added Value

  • Capital expenditure for E-Mobility
  • Starting point of an EV charging concept

MODULE 3: Long-term & Circular Investment through C2C

The construction industry consumes around 40 – 50% of raw-materials and at the same time is responsible for 60% of the total waste production. Not only does it have an ecological impact but also additional cost implications. Circular Economy is the key solution to mitigate this as it turns buildings into material banks. This means that an investment in Cradle to Cradle® (C2C) asset is an additional investment in raw-materials which over the past decades have seen a constant increase.

Our C2C buildings are designed according to the Circular Economy principles and can be disassembled at the end of the lifetime and the materials can be sold or reused – it will have a residual value which equals the raw-material value of the building. The asset will maintain this value which further helps to decouple financial risks from the “market value” of the asset. This residual material value can reach up to 30 % of the total investment and starts to be recognised by funding partners at the initial investments. Most existing buildings contain resources which can be harvested by Urban Mining approaches, saving costs on demolition, and delivering materials for new construction. For renovation projects this can be a game changer!

Our Approach​

  • Assessment of material reuse potential of each component​
  • Assessment of material recycling potential of each component​
  • Calculation of the amount (by weight) of reusable and recyclable materials and resulting waste-reduction for each component
  • Estimation of the value and cost saving potential through reuse and recycling
  • Overview of subsidies, tax benefits and compliance with sustainable finance​
  • Assess the contribution of Circular Economy measures to Green Building Certification Systems (e.g. for BREEAM)

Your Added Value

  • Heads up on future reselling prospects​
  • Improved Green Building Certification (BREEAM)
  • Risk Assessment regarding Materials (Pollutants and Recyclability)

Image: City Hall of Venlo’s design is a paramount example of applying the Cradle to Cradle design principles on building scale. EPEA - Part of Drees & Sommer supported the project by creating Circularity Passports for building products. © Kraaijvanger Architects

MODULE 4: Zero Carbon

The real estate sector faces multiple global and national investment challenges from climate change. The Dutch government is increasingly confronted by public litigation in sustainability, environmental and societal issues. Following publicity cases contesting its measures to meeting its own, European and international goals on sustainability and the environment, the Dutch market needs to expedite efforts to reduce CO2 emissions. It needs stricter adherence to the European requirements to limit emissions of Nitrogen Monoxide (NO) and Nitrogen Dioxide (NO2) and their negative effects on flora and fauna in Natura 2000 nature conservation areas.

Carbon Footprint of Skyrise Buildings in Amsterdam

Measures are underway to gradually make greater carbon cuts to meet the Netherlands’ Zero Carbon targets followed by investors pledging carbon neutrality. Zero Carbon strategies need to be applied to the existing building portfolio and must become a key target for new developments. Very often, only the obvious operational carbon is measured which covers only one side since 40 – 50% of carbon emissions are embodied in the materials used for building construction

The new European Green Deal and EU Taxonomy are focusing on whole life carbon emissions which consider both: operational and embodied carbon over the lifecycle of a building. The carbon footprint of an asset can become a real burden in the future, hence an assessment during initial transactions is becoming more and more important.

Our Approach

  • Initial Definition of a roadmap towards Zero Carbon
  • Comparison of existing asset performance with benchmark values
  • For projects in design phase, estimation of embodied carbon.​
  • Proposal of potential carbon reduction options
  • Proposal of carbon off-set options (buying certificates, invest in renewables etc.)

Your Added Value

  • Initial capital expenditure for Zero Carbon targets​
  • Benchmark to compare with the rest of the market
  • Asset evaluation to check suitability with the company's corporate strategy

Image: City Hall Freiburg, Europe's first net plus building taking construction beyond Zero Carbon

MODULE 5: ESG Check

Environmental, Social and Governance Check (ESG) refers to the three central factors in measuring the sustainability and social impact of an investment in a company or business. Most investors have corporate ESG strategies in place which should be applied to the core business and the asset portfolio. This means that during an asset transaction ESG criteria can be used to check whether the investment fits to the corporate ESG approach. In this context sustainability approaches following Green Building Certification Schemes, e. g. BREEAM, LEED, DGNB, WELL, HQE can also be identified through pre-assessments to find out whether a building can receive the right certifications or which upgrades and cost would be necessary.

Our Approach

  • Initial ESG requirements checks either provided by clients or based on our proposal
  • Strategy workshop on ESG, EU Taxonomy and sustainable finance to define an individual framework​
  • Assessment of the existing property or design based on ESG requirements and the framework

Your Added Value

  • Independent evaluation regarding ESG requirements.​
  • Information whether the asset is sustainable finance ready
  • Pre-Assessment of Green Building Certifications
  • Roadmap with necessary upgrades and cost to achieve the desired level.

Image: World Trade Center I & II Brussels where Drees & Sommer and EPEA are providing support for the deconstruction and processing of the old building materials and their value-adding re-use in other construction projects.

Drees & Sommer is Climate Positive

As the European leader in Consulting, Planning and Project Management, we work with corporations, funds, public institutions and private investors to maximise the value of our clients’ real estate and the efficiency of their projects. We are committed to climate protection, sustainable projects and business practices. In 2020, we celebrate our 50th anniversary by becoming Climate Positive. The real estate sector alone is responsible for around 40 percent of CO2 emissions. We have a social responsibility to provide affordable housing, liveable cities, functional infrastructure and visionary mobility concepts. We drive sustainability, along with digital transformation to enable important innovations. Our long-term goal is to be a beneficial company, which means in addition to its success as a business, also benefits the environment and society.

Our TDD References

Clockwise: Allianz Tower, Rotterdam, © Allianz I Tower 185, Frankfurt, © Marco Kröner I ServiceNow, Surrey © Rick Meeijer I PalaisQuartier, Frankfurt, © Rabo Real Estate Group I Procession House, London I Kennedy Tower, Eindhoven

Your Contact

Elger Groenland, elger.groenland@dreso.com, +31 (0)6 295 124 14