Due Diligence Report 1

This report presents findings from a due diligence analysis carried out on the proposed new residence for the client, Mr. and Mrs. Charles Eugene-Farley. The project is a new residence on a plot along McCardell Street in Taylor, ACT, Australia. The due diligence checklist items covered in the report include: financial, site conditions, pre-construction, town planning, development, pre-purchase, future prospects, and other risks.

Due Diligence Report 1
DUE DILIGENCE REPORT
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Due Diligence Report 2
Table of Contents
1. Introduction......................................................................................................................................3
2. Financial............................................................................................................................................3
3. Site Conditions................................................................................................................................4
4. Pre-Construction.............................................................................................................................5
5. Future Prospects............................................................................................................................5
6. Town Planning.................................................................................................................................5
7. Development....................................................................................................................................6
8. Pre-Purchase...................................................................................................................................6
9. Other Risks.......................................................................................................................................6
10. Recommendation........................................................................................................................8
Bibliography............................................................................................................................................9

Due Diligence Report 3
1. Introduction
This report presents findings from a due diligence analysis carried out on the proposed new
residence for the client, Mr. and Mrs. Charles Eugene-Farley. The project is a new residence on
a plot along McCardell Street in Taylor, ACT, Australia. The ultimate goal of the due diligence
report is to determine the suitability of the proposed project. This will help the client to identify
issues that have to be improved, changed or completed before commencing the actual
construction works on the site. Architectural drawings of the project have already been provided.
The due diligence checklist items covered in the report include: financial, site conditions, pre-
construction, town planning, development, pre-purchase, future prospects, and other risks.
2. Financial
A similar plot (block 12 section 11) of size 479 m2, which is close to the proposed plot (block 14,
section 11) as shown in Figure 1 below, is on offer at a price of $399,000 (Nappilly, 2019).
Using interpolation, the value of the proposed plot, which is of size 453 m2, is $377,000.
Figure 1: Plot 14, section 11 (Suburban Land Agency, 2019)
The total size of the residence is 251.50 m2 and the average construction cost of a project home
in Canberra region ranges from $1,700 to $3,400 per m2 (Falk, 2019). Considering the slope,

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soil quality and susceptibility of the site to floods (On Property, 2019), the reasonable
construction cost per m2 is $2,500. This means that the estimated construction cost for the
proposed residence is calculated as follows:
Construction cost = 251.5 m2 x $2,400 per m2 = $603,600
Therefore the purchase cost of the project is:
Total purchase cost = land value + construction cost
= $377,000 + $603,600 = $980,600
Taylor has a population of about 6,000 and majority of the residents are homeowners while a
very small percentage are renters. This shows that the largest percentage of people in Taylor
are buying homes or land to build their homes. This shows that the client has made the right
decision to buy land in the area and build their home. According to property market trends in the
area, the median price of a 4-bedroom house is $705,000 (Domain Holdings Australia, 2019).
The rental median price is $630 per week (REA Group, 2019). The prices have continued to
increase over the past few years.
This means that the rent ratio is determined as follows:
Rent ratio= Purchase cost
Annualizede rent = $ 980,600
$ 630/w x 52 w =29.93 ≈30
The greatest potential for growth of the project is the proposed government and private
development projects in the region. These projects will improve the social and economic
development in the region thus increasing the quality of life and property value.
3. Site Conditions
The proposed site is a vacant land with a generally sloppy landscape with small rock pebbles. It
is susceptible to flood risks and soil erosion. That is why there is a proposed retaining wall
around the property. All essential services and utilities are not connected to the property but
they are available within a short distance and therefore connection will be easy and at a
reasonable price. There are also a few regulated trees on and around the property. This
requires the contractor to seek approval from relevant authorities before commencement of
excavation works so as to know how to protect the trees. Significant ridges and hilltops also
have to be retained. Additionally, the proposed site has numerous rocks including quartz
andesite, grey dacite, mudstone, slatey shale and ashstone. There is also a fault in the area that

Due Diligence Report 5
may require further investigation to establish if it will have any effect on the construction
process. An investigation need to be done to determine the suitability of the available local
building materials for the proposed new residence project.
4. Pre-Construction
There is little vegetation and grass on the site and therefore removing them will be easy.
Considering the geology and site conditions of the site, and the type of building to be
constructed, the types of construction needed are: topsoil excavation, rock excavation, trench
excavation and earth excavation (Ron Meyer & Associates Excavating, 2017). The required
landscaping is oriental landscape, which comprises of evergreen plants, rocks, water features
and different plants (HomeAdvisor, 2019). Other decorative elements of landscaping should be
selected based on the client’s lifestyle. This landscaping will help in reducing storm water runoff,
sediment losses and soil erosion, and improve air quality and environmental comfort. The safety
measure already taken is inclusion of a retaining wall round the property and weatherboard
cladding. These will reduce environmental risks to the property. Another safety measure is for
the contractor to study the site so as to determine risks (such as slope and soil conditions) that
may affect safety during construction process.
5. Future Prospects
The real estate industry in Taylor, ACT has been booming over the past few years and the trend
is expected to improve in the future. There are several development projects that have been
proposed in the region including road infrastructure, schools, hospitals, restaurants, shopping
malls, public spaces and community facilities. With these projects, land value in Taylor is
definitely expected to continue soaring. The current values of land and the entire property are
$377,000 and $980,600 respectively and are expected to increase by about 5-10% annually in
the next few years. The site is classified as residential and structural engineer’s certification is
being processed. Development approval (DA) or building approval (BA) has already been
applied for and energy efficiency report for the property is also still being prepared.
Nevertheless, the property has been designed with sustainability in mind and therefore it is
expected to be energy efficient.
6. Town Planning
The proposed land is limited to residential development, which can be either a house or units.
The property is located in Taylor, which is a suburb of Guangahlin in Canberra, Australia. The
suburb is just 4 km and 16 km from Guangahlin Town Centre and Canberra CBD respectively,

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and it is one of the fastest growing new suburbs of Canberra (Barr, 2017). The area has several
proposed development projects, including infrastructure and community projects, which have
continued to attract property investors. Property prices in the area have increased significantly
in recent years due to these developments. The property is within walking distance to schools,
shops, cafes, restaurants, community facilities and proposed playing areas, parks and a group
centre. It is also within a short driving distance to Guangahlin Town Centre.
7. Development
The required permits for this project include: certificate of design compliance, planning permit
and building permit. Other permits, such as occupancy permit, will be obtained after completion
of the project. There are no specific technologies, processes or costs that may limit entry of the
proposed property into the market. As stated before, the government has a masterplan of
developing the area so as to improve the lives of residents and the regional economy. Possible
additions to the building include solar energy systems, water harvesting systems and an
automated building management system. These additions will increase resource efficiency and
sustainability of the building.
8. Pre-Purchase
There is convenient and easily accessible public transport in the area even though there are
plans to improve and make it better and more integrated. The property is surrounded by several
streets that make it easier to access public transport. Some of the streets include: McCardell
Street, Khen Herse Crescent Street, Alison Burton Rise Street and Spooner Street. Therefore
the land is easily accessible and there are enough car parks for the client family. So far, there
are no services connected to the property but all essential services are available in the area.
This includes electricity, water and gas.
9. Other Risks
The likelihood of uncontrollable events that would affect the construction and operations of the
project is very low. This means that the project can be implemented from start to finish without
being hampered by any major event. The general condition of land is also suitable for
commencement of construction projects. Several similar projects have been completed in the
area without any casualty losses hence the contractor has to put in place adequate safety
measures during the construction process.

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The rating of the above due diligence checklist items is provided in the attached Excel
spreadsheet. The rating is on a scale of 1-10 with 1 and 10 representing the least and best
favorable conditions for the project respectively. The summary of the rating and the analysis
chart are provided in Table 2 and Figure 1 below respectively.
Table 1: Due diligence rating summary
No Checklist item Rating
1 Financial 6
2 Site Conditions 7
3 Pre-Construction 4
4 Town Planning 8
5 Development 6
6 Pre-purchase 7
7 Prospects for the future 6
8 Other risks 3
Financial
Site conditions
Pre-Construction
Town planning
Development
Pre-Purchase
Future Prospects
Other Risks
0
1
2
3
4
5
6
7
8
9
Rating of Due Diligence Checklist Items
Rating
Figure 1: Due diligence analysis chart

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10. Recommendation
The total size of plot and building for the proposed new residence in Taylor, Canberra, is 453 m2
and 251.5 m2 respectively. The project is located in one of the fastest growing suburbs of
Guangahlin in Canberra, Australia. The region’s real estate sector is booming and there are
several development projects planned to be rolled out in the region. Therefore based on
financial, site conditions, pre-construction, town planning, development, pre-purchase, future
prospects and other risks analyses carried out, it is recommended that the client should go
ahead with the proposed new residence project. The estimated value of the land and
construction cost is $377,000 and $603,600 respectively. This amounts to the total project or
purchase cost of $980,600.

Due Diligence Report 9
Bibliography
Barr, A., 2017. ACT’s population to reach over 421,000 by 2020. [Online]
Available at:
https://www.cmtedd.act.gov.au/open_government/inform/act_government_media_releases/barr/
2017/acts-population-to-reach-over-421,000-by-2020
[Accessed 25 April 2019].
Domain Holdings Australia, 2019. Bonner, ACT 2914. [Online]
Available at: https://www.domain.com.au/suburb-profile/bonner-act-2914
[Accessed 25 April 2019].
Falk, T., 2019. How much does it cost to build a house?. [Online]
Available at: https://www.finder.com.au/how-much-does-it-cost-to-build-a-house
[Accessed 25 April 2019].
HomeAdvisor, 2019. 8 landscape design styles. [Online]
Available at: https://www.homeadvisor.com/r/8-landscape-design-styles/
[Accessed 25 April 2019].
Nappilly, A., 2019. Residential land: 9 McCardell Street. [Online]
Available at: https://www.realestate.com.au/property-residential+land-act-taylor-202328226
[Accessed 24 April 2019].
On Property, 2019. How much does it cost to build a house?. [Online]
Available at: https://onproperty.com.au/build-a-house/
[Accessed 25 April 2019].
REA Group, 2019. Bonner: Australian Capital Territory 2914. [Online]
Available at: https://www.realestate.com.au/neighbourhoods/bonner-2914-act
[Accessed 25 April 2019].
Ron Meyer & Associates Excavating, 2017. 13 common tyes of excavation (by type and material).
[Online]
Available at: https://ronmeyerexcavating.com/types-of-excavation/
[Accessed 25 April 2019].
Suburban Land Agency, 2019. Interactive Map Single Residential Land. [Online]
Available at: https://suburbanland.act.gov.au/developments/?
land_type=Residential&location[]=68&land_sub_type[]=Single
%20Residential&land_sub_type[]=Suburban%20Residential&sale_method[]=Over%20the
%20Counter&sale_method[]=Auction&sale_method[]=Tender&sale_method[]=Indus
[Accessed 25 April 2019].