Asian investors in the United Kingdom and European commercial property sector may be receiving conflicting advice about the assets they are acquiring.
According to Tuffin Ferraby Taylor (TFT), la eading property and construction consultancy, overseas investment into U.K. commercial property now account for more than 40 percent of overall investment, with £ 25.4 billion invested in 2013 – the latestavailable figures. China alone was the U.K.’s third biggest investor that year.
Technical due diligence – the process of research, analysis and discovery in which a potential buyer appoints a building surveyor to gather information about the condition, physical characteristics, installations, site and surroundings of an asset – is a central part of the investor’s decision-making process.
Using this key information, investors are able to make an assessment of whether any defects will impact on short-, medium- or long-term investment performance. They are also able to use the assessment of risk to strengthen their negotiation position
Yet evidence suggests that this advice has the potential to be ‘tweaked’ by advisors working on the deal itself. The very real potential for conflicting advice creeps in when the same firm is both advising on the deal and also on technical due diligence.
Paul Spaven, Partner of Tuffin Ferraby Taylor, speaking at the beginning of MIPIM Asia in Hong Kong where he is the only U.K. building surveyor in attendance, said: “Investors deserve independent advice separate from teams – quite understandably – whose principal focus is getting a deal over the line.
”The reputation of the surveying profession depends on it. We want all those who invest in European real estate – and particularly those who are not from home markets – to benefit from independent and unconflicting advice.
“I am fully aware that this topic is almost a taboo in the industry – true independence has become harder and harder as the sector has consolidated but we fully support the current RICS investigation into conflicts of interest in the property sector and look forward to sharing our considerable insight in this area with our regulatory body.”
