About Natasha
Natasha has over 17 years of experience in the planning industry, having worked on projects throughout New Zealand for private developers as well as for central and local government sector clients. As CivilPlan’s Associate Director of Planning, she shares her thoughts on a planner’s role in due diligence.
Land development and due diligence
When it comes to investing in or developing land, not undertaking proper due diligence is a surefire way to miss out on maximising the development potential of your property and understanding potential risks.
Yet we often see developers rushing in to acquire land without fully appreciating the opportunities or limitations that the property offers. In some cases, even when due diligence has been conducted, it has been undertaken by professionals who lack the relevant expertise. This can lead to unexpected roadblocks down the line, such as costly consenting issues, or worse, not being able to develop the land as hoped for.
Why do due diligence?
During market peaks, when land is being snapped up, the temptation to act quickly is understandable. However, this often results in “brushing-over” due diligence.
Without undertaking proper due diligence, developers risk facing unexpected obstacles down the track. Although the size or topography of a piece of land may appear to be favourable, zoning limitations may restrict the intensity and the type of buildings that could be constructed. Furthermore, infrastructure limitations such as insufficient network capacity or roading could make a project unfeasible. In some cases, the land may not be eligible for development for decades, due to Council plans or when infrastructure upgrades are scheduled
These unforeseen obstacles can result in a substantial loss of potential value and diminished returns on investment. The land may be undevelopable, generating no revenue while holding costs mount.
Should a lawyer or real estate agent do due diligence?
Both lawyers and real estate agents play an important role in property transactions, however, a planner is better placed to advise on the current and future development potential of land as they typically have a more in-depth knowledge of the zoning and other Council requirements relating to a property.
For example, planners will have a greater understanding of the design and amenity outcomes sought by Council in relation to residential developments. Although Councils are placing more and more emphasis on intensification, it is not only about maximising yield. Other aspects such as orientation of buildings, location and quality of outdoor areas, integration with public spaces including transport modes and open spaces – all of which can impact the likelihood of success for a development.
How much does feasibility and due diligence cost?
There is a common misconception about the cost of due diligence, which may be why some stray from it.
Due diligence can be tailored to suit what the buyer/developer intends to do with the property. In most cases, the initial “key considerations” can be reviewed and summarised in an email back to the client.
For more aspirational projects, a more detailed evaluation may be wise considering the level of investment and risk a client is willing to take. In such cases, a planner can provide a comprehensive assessment which could be used with the banks, lawyers and other stakeholders involved in funding or approving the project. However, even comprehensive reports need not be excessively lengthy or costly if the client has an idea of what they would like to achieve on the site. For example, if they would like to establish and operate a childcare centre, our advice can be tailored for that specific purpose instead of reporting on all of the zoning rules, some of which may only be relevant to a residential development.
The value of a planner
Besides advising on zoning rules and Council requirements, planners can also help you to identify opportunities that may not seem obvious.
A recent example involved a residential development in West Auckland where our planners were able to do just that.
This site was zoned Future Urban, suggesting that it first needed to be rezoned to enable development. During the due diligence stage, the planner identified the Council’s plans for the specific area, and based on that, advised the developer how a development of the site could be sequenced to align with the Council’s plans and infrastructure delivery. Our early and tailored advice gave the developer the confidence to commit to rezoning the land through a private plan change process, avoiding potential delays and ensuring the project’s success.
Had the developer not engaged with our planner at an early stage, they might have been left waiting on a Council-initiated plan change, which may have delayed the development of their site by years.
Choose CivilPlan
By identifying potential risks and opportunities from the outset, we can help property developers to make informed decisions to make their projects a success.
At CivilPlan, our expert team of planners, engineers and surveyors take a collaborative approach to every project. We specialise across many sectors and our due diligence advice can be tailored to the client’s aspirations and budget.
Whether you need a high-level “sense check” or a comprehensive assessment on your next property investment – contact us and let our team guide you through the process.