Speed of Due Diligence and Risk for Investors
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IVI/CBRE is currently seeing an unprecedented trend in how fast due diligence needs to be performed. This is especially true in core gateway markets such as New York, Los Angeles, San Francisco, Seattle and Chicago to some extent. There is an increased appetite by investors to deploy capital into real estate that is putting pressure on them to do deals more quickly. This increasing “need for speed” creates a greater chance of investors being burned on real estate deals, as when times are good in the industry investors are sometimes blind to past failings.
There is no doubt investors have a decreasingly short period to make investments, as right now these gateway markets are hot and more and more equity is available for deployment, causing prices to rise as demand outstrips supply. The fear is that in order to meet expected returns, investors will be required to either move up the risk spectrum or to diverge from their usual investment strategy while on the hunt for attractive assets. Some investors may also face additional risk by moving away from their core property strengths and taking on assets they are less experienced in managing…
Speed of Due Diligence and Risk for Investors
