Shaping the saleability of assets

Buying and selling property is typically a complex process, linking a financial investment proposition with an illiquid and often complex physical asset. Experienced players in the market know that emotions and ‘gut feel’ play a role in transactions where numerous tangible concerns – from currency markets to covenant strength, regional potential and sector trends – are understood and interpreted by those on both sides of the deal.

In the last 6 to 12 months, recent fund redemptions have arguably sustained transactional activity. Looking ahead, with increased pricing confidence and a more positive global economic outlook, vendors are more confident in achieving value for their assets.

Despite this tentative positivity, technical issues with assets inevitably complicate and often frustrate deals. In particular, the availability and accuracy of data is proving critical to an asset’s future saleability. We estimate that one in four deals is impacted by a lack of information on several key areas.

There are many technical, regulatory and operational challenges which can introduce risk to transactions. In a competitive market, where deals need to move quickly, these can result in uncertainty and missed opportunities. And it might not be long before owners recognise that they’ve left it too late to make improvements on important areas, leading to stranded assets which are unsellable and difficult to bring up to market standards.

In the context of a market such as the UK where pricing confidence remains delicate, investors are cautious and rely heavily on technical due diligence (TDD) to help inform and shape their insights into price, performance and viability. Given that both vendors and buyers benefit from a comprehensive technical understanding of an asset, it’s important to be proactive and gather the data before a deal is put on the line.

What should you look for? We reviewed our last 100 or so deals which took place over 100 days in late 2024. We picked out the recurring issues which either delayed or would have delayed the deal if the concerns weren’t answered promptly. We identified a handful of technical areas which continue to hold up transactions but – if addressed – can help create market-ready assets:

1. Energy performance and pathway to net zero carbon: Minimum energy efficiency standards (MEES) deadlines (2027, 2030) establish clear expectations of an asset’s energy performance and set the tone for investment expectations. Assets which fall short will be unsellable, and those which lack a clear pathway to net zero carbon emissions face a tougher sales process. Giving the market an understanding of the scope and cost of de-carbonising an asset through proactive net zero assessments and accurate energy performance certificates (EPCs) offers buyers confidence in an asset’s environmental credentials. For buyers looking beyond EPCs and MEES to gauge value, real-time performance data will demonstrate a building’s actual energy use and operational efficiency to highlight the savings and attractiveness to occupiers.
2. Inaccurate/unavailable information: A physical building survey is still a fundamental part of the TDD process, but assessments of condition and performance are now typically done by interrogating supporting building data. Where information is lacking or where data does not support performance claims, then confidence reduces, negotiations can become protracted and the deal may be compromised.
3. Asset condition and maintenance records: A property in sound repair with clear maintenance records signals lower risk.  Addressing any issues pre-listing prevents drawn-out negotiations and price reductions.
4. Fire safety compliance: With the hyper-awareness of the risks fire can pose to a building, investor confidence hinges on clear fire safety compliance, and not only for tall buildings over 18m. Presenting a building to the market with an explanation of fire risks, detailed construction information, external façade reports, fire strategy and/or risk assessment, will inevitably speed up the process and provide confidence to purchasers.
5. Future adaptability and risk mitigation: As the Building Safety Act has demonstrated, new legislation quickly shapes the market. Vendors must keep abreast of incoming regulation – whether relevant to specific sectors or the whole market, to account for the potential future compliance risks. Showing buyers that these are known and that an asset can accommodate them will reassure buyers and also speed up transaction times.

In light of the commercial forces and many other variables which can impede or facilitate a deal, the technical elements of an asset are knowable and controllable.

The scope for aborted deals continues to increase with higher demands and expectations on quality, compliance and performance, especially when it comes to fire safety and energy performance. For buyers, these are the issues to stay close to. For vendors, acting on these requirements before entering the critical timeframes of a deal could spell the difference between a swift sale – or a missed opportunity.