Mixed-Used Tower Due Diligence, Cyprus

Navigator conducted independent investment due diligence for an international investor developing a proposed 30 storey mixed use property development in Cyprus.

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Our review identified material deficiencies in the construction budget, engineering analysis, building systems, public realm design and stakeholder strategy. The findings demonstrated that the project had been substantially undercosted and faced significant technical, planning and implementation risks.

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Project Context

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The proposed development comprised a high rise, mixed use tower on a site that had already been acquired by the developer. The scale of the project required substantial foundation and underground construction works, complex mechanical and vertical transportation systems, and close coordination with municipal authorities and the surrounding community.

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Navigator was appointed to provide an independent assessment of the development concept, capital requirements and principal investment risks before the investor committed further resources.

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What We Did

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Navigator reviewed the proposed development from an investment, technical, financial and implementation perspective. Our work examined whether the project budget and development strategy adequately reflected the requirements and risks associated with constructing a major high rise building in its proposed location.

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The due diligence covered:

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• Construction budgets and major cost assumptions

• Foundation and underground parking requirements

• Elevators, heating, ventilation and air conditioning systems

• Ground conditions, subsidence and flooding risks

• Public realm and ground floor design

• Planning and building permit requirements

• Municipal and community relations

• Project implementation and contingency provisions

• Overall investment feasibility and risk exposure

 

Construction Costs and Capital Requirements

 

Our review found that several essential construction cost categories had been materially underestimated. The budget did not adequately provide for the scale and complexity of the required foundation works or underground parking. Cost estimates for elevators and heating, ventilation and air conditioning systems were also incomplete and did not reflect the requirements of a 30 storey mixed use development.

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These omissions had a material effect on the project’s total capital requirement, funding structure and prospective investor returns.

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Engineering and Site Risks

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The technical analysis had not sufficiently assessed the site’s exposure to ground subsidence and flooding. These issues created potential risks for foundation design, underground construction, water management, construction costs and the long term integrity of the development.

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The absence of sufficiently developed engineering assessments also increased the likelihood of design revisions, construction delays and additional capital requirements.

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Public Realm and Community Value

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The proposed ground level public area was not adequately designed and did not establish a clear function for residents, visitors or the surrounding community. 

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For a development of this scale, the relationship between the tower, the public realm and the surrounding urban environment was a material planning consideration. The weakness of the proposed design reduced the project’s contribution to the local area and created additional planning and stakeholder risks.

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Municipal and Community Relations

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The development strategy did not allocate sufficient resources for consultation and engagement with the municipality, planning authorities and the local community.

A high rise development can create legitimate concerns relating to density, traffic, infrastructure, visual impact, public access, construction disruption and community benefit. The absence of a properly funded stakeholder engagement strategy represented a significant implementation risk.

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Outcome and Investment Decision

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Navigator concluded that the proposed investment was exposed to material financial, engineering, planning and stakeholder risks that had not been adequately reflected in the development budget or implementation strategy.

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The project did not receive a building permit and was subsequently cancelled, despite the developer having already acquired the site. The due diligence provided the investor with an independent basis for avoiding further exposure to a development whose actual costs and risks were substantially greater than originally presented.

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The assignment demonstrated the importance of combining financial and technical due diligence with local knowledge of planning requirements, municipal processes, site conditions and community expectations.

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Areas of Expertise​

Property Investment Due Diligence; Mixed Use Development; High Rise Construction; Construction Cost Review; Capital Expenditure Analysis; Engineering Risk; Foundation Design; Underground Parking; HVAC Systems; Elevator Costing; Flood Risk; Ground Subsidence; Planning Risk; Public Realm Design; Community Relations; Municipal Engagement; Investment Risk Analysis​

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Confidentiality Notice

The project reference presented here is an actual example of Navigator Consulting's experience. Stock photography and conceptual images are used for illustrative purposes only and do not depict the actual project, client, owner or location. Certain technical, financial and commercial information has been modified, generalised or omitted in order to preserve client confidentiality and commercially sensitive information.