In a market where values are being squeezed, the quality of any development project is becoming increasingly significant not just for the tenant or developer but for the banks and real estate finance providers too, according to Tuffin Ferraby Taylor (TFT).
Historically funders have perhaps been more interested in the commercial risk and the costing than the quality of the product, but in the current climate all too often problems can arise leaving the funder sitting on a development. With poor quality assets being harder to shift, a lack of attention to quality is potentially short sighted.
Richard Aitchison, Partner at TFT and specialist in project monitoring, gives his view on the importance of the project monitoring surveyor's role in property development in the current market.
"The turbulent market conditions are changing the lender/borrower relationship and monitoring surveyors must think how best to fit in with this. This uncertainty and caution in the current property market is highlighting the need for the role of project monitoring surveyors to evolve, focusing more on facilitating the development of commercial property and keeping a check on standards and budgets to create value for all parties involved.
"Whilst monitoring surveyors have a duty to protect the interests of their client, whether it is the funder, investor, or tenant, they also must have the ability to see the bigger picture. This is best achieved by understanding the commercial position of both the client and the developer.
"To do this, monitoring surveyors must be given the opportunity to review any development or facility agreements, ideally from as early a stage as possible in the development, so that they can understand the project set up and identify potential risks. This enables the monitoring surveyor to sift through the facts and pick out pertinent points without getting side tracked by pedantic details and box-ticking, allowing them to improve investment certainty by quantifying and evaluating the risks to the project, without obstructing the progress of the development.
"Effective due diligence will give assurance that the investment has been examined holistically and that the monitoring surveyor is aware of the inherent risks.
"Monitoring surveyors need to be able to build a good working relationship with the developer so that if and when problems occur there is a means to overcome them. The failure to resolve problems or conflicting objectives is no use to any of the stakeholders of a development.
"It is in the interest of both the funder and the developer to have a successful outcome at the earliest stage. A project that is successful for the developer will also generally be successful for a funder or investor.
"At TFT we strongly believe that both a qualitative and a cost driven approach is needed to satisfy both the lenders and the developers and to meet the challenges of the current real estate market."