Investor Due Diligence on Real Estate Projects

How does the investment structure change the diligence?

An equity investment, secured debt exposure and purchase of completed inventory involve different rights and risks. Start with the term sheet, proposed entity structure, security and exit assumptions. The review should identify which entity owns land, holds development rights, sells units, receives collections and owes the investor obligations. A familiar group brand does not establish that the investment vehicle holds the relevant assets.

Map title, approvals, project registration and material agreements to the proposed transaction. If returns depend on a landowner share, TDR, future approvals or sales in another phase, those dependencies should be explicit. Legal, technical and financial teams should use a common project model so an assumption excluded from one report is not inadvertently treated as verified in another.

• RERA Act, 2016, Section 4 (application for registration)
• RERA Act, 2016, Section 15 (obligation on transfer of majority rights)
• Transfer of Property Act, 1882, Sections 7, 8 and 54 (transfer and sale)

Which operating and regulatory risks need evidence?

Review progress, remaining approvals, cost assumptions, committed outgoings and funding sources within the agreed scope. Compare public disclosures with supplied records and identify gaps. Litigation and insolvency checks should use verified entities and actual orders where material. A list of cases or a promoter’s declaration is not a complete assessment of legal exposure.

Account review should respect the statutory project-fund structure and identify what cash is available for the proposed investment obligations. A contractual waterfall cannot simply redirect protected project money. Check covenants, security and exit provisions against existing lender and allottee rights. Valuation, commercial feasibility and regulated investment advice are separate unless expressly and lawfully included.

• MahaRERA Order 56/2024, 27 June 2024: maintenance and operation of project bank accounts
• Insolvency and Bankruptcy Code, 2016
• RERA Act, 2016, Section 11 (functions and duties of promoter)

How are findings converted into transaction conditions?

The report should prioritise issues by consequence and evidence rather than provide a generic risk score. Identify conditions precedent, representations requiring support, post-closing covenants and issues the investor must consciously accept or decline. Each condition should specify a responsible party and closure document. A promise to provide evidence later is not the same as satisfying the condition.

Update material searches and assumptions before closing if the transaction or project changes. Maintain a record of the report’s cut-off date, access limitations and reliance permissions. The investor makes its own investment decision with appropriate professional advice. This service does not predict returns, assure capital protection or promise a future approval, and any regulated opinion requires the actual professional’s sign-off.