BOOM IS IT ALREADY BUST? - Prendos
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SUMMER 2017 facebook.com/PrendosNZ @PrendosNZ
WELLINGTON’S
BOOM IS IT ALREADY BUST?
Prendos New Zealand Limited 0800 PRENDOS www.prendos.co.nz
Leading consultants to the property and construction industry
IN THIS EDITION Oriental Parade, Wellington
PROPERTY UPDATE COMMERCIAL PROPERTY SPECIAL FEATURES
Wellington’s BOOM, is it aleady bust?.........3 Flammable Cladding...................................13 Introducing Respond-Architects...................22
BY MAX MEYERS, Valuer BY SEAN MARSHALL BY JODIE CAMERON, Marketing Manager
Tauranga, Cool for the Summer?.................5 Watch This Space - Auckland’s Unitary Cumberland House Case Study....................24
BY ROSS FORSYTH, Valuer Plan is a game changer................................14 BY JODIE CAMERON, Marketing Manager
Auckland: The place desired by many?........6 BY RORY CROSBIE, Director
Breaking Boundaries....................................26
BY GORDON EDGINTON, Valuer Long Term Maintenance Plans - BY REBECCA WARD et al
it’s all in the detail........................................16
BY LEON GOODWIN, Building Surveyor
FOCUS ON...
BODY CORPORATE
The Christchurch Rebuild.............................8
BY RORY CROSBIE, Director
Seismic Shift...................................................9 Maintaining Buildings,
BY RORY CROSBIE, Director Health and Safety Planning.........................20
BY PHILIP O’SULLIVAN, Director
Fire - Is This the New Leaky?.....................10
BY JOSH RAWLINSON, Building Surveyor
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 2
FEATURE ARTICLE
WELLINGTON’S
Is It Already Bust?
BOOM
BY MAX MEYERS, Registered Valuer, max@prendos.co.nz
“Boom” is the new headline on The Professionals Estate Company) have also reported the least
sales signage and it aptly describes the dramatic number of sales for 6 years.
21% increase in values for the region that has taken
Wellington by surprise. Also we note a recent ASB property buyer
confidence survey that suggests a majority of
The dramatic switch occurred in October last year buyers are now thinking it is a bad time to invest.
when the Reserve Bank’s Loan to Value Ratio (LVR) Add to this the recent increases to longer term
rules changed. The effect was almost overnight as mortgage interest rates, which will be an important
can be seen in the comparison graph below with influence as higher prices are supported by the low
Auckland inflation rates decreasing and Wellington cost of borrowing.
increasing from that point.
This will be more noticeable when rates significantly
The scramble for Wellington properties has seen increase. On a $400,000 mortgage, a 1% interest
big turnouts for open homes, large numbers of rate increase from 4.5% to 5.5%, on the same
offers on properties, and very aggressive buying. repayment amount means you can borrow $32,000
less.
There seems to be some easing of this trend in
recent weeks but the metrics still point to a strong The suddenness of the change in Wellington
market with above average numbers of sales, faster suggests it is an increase in investors and specula-
than average selling times and low levels of tors rather than home owners looking for property.
property listings available for sale.
We expect this to continue for a short time but QV PRICE MOVEMENT | AUCKLAND v WELLINGTON
Wellington will inevitably follow Auckland trends SOURCE QV - PREPARED BY MAX MEYERS
within 6 months, as the cause of the change is the
same. Wellington does not have a shortage of
ANNUAL PERCENTAGE CHANGE
housing to the same extent as Auckland, and
because it has not experienced the long period of
inflation, there is a lower risk of declining values.
The Auckland market has turned around, with fewer
sales taking place, longer selling times and value
increases trending down as shown in the graph. This
is the trend for most of 2016, indicating demand is
falling which is not evident if we just look at prices.
Barfoot and Thompson, (Auckland’s largest Real
FEATURE ARTICLE CONTINUED
“Current conditions
The rental market is a more reliable gauge of a shortage of provide an ideal
houses and rentals are increasing only modestly so far. opportunity to sell
Without doubt more houses are needed for a growing
population, but demand has been unduly influenced by particularly for the less
investors and speculators who have amped up prices
forcing out those with real housing needs.
preferred types
of property.”
Investment in property is essential to creating supply to
meet the needs of a growing population, but speculative
investment has a real risk when prices stop going up. At
this point there is no further reason to hold property The Auckland market has passed its peak in value
(no capital gain and very low rental returns), and the smart increase in Oct 2015. The rate has been falling most of
money will sell out to realise gains. This will be the the year but the rate is still a healthy 13.8%. The
correction phase, the first signs being less sales and slower number of sales peaked in March 2015 and numbers
selling times and reducing property inflation rates. have fallen and are now consistently less that the same
time in 2015. The time to sell is now at 33 days,
It will be some time before prices start to decline but by consistently longer than in 2015, and trending up.
hold off to avoid making a loss, the reverse of the buying Wellington has had an average increase of 21%
quickly before prices go up. For Wellington, the volume, compared to 1.7% the same time last year.
time to sell, and price increases indicate there is still an
upside, but the reverse is indicated for Auckland. The metrics for Wellington suggest the market remains
strong with an above average number of sales, low
With a huge increase in investment home supply is stock and listing numbers, and well below average
increasing quickly (particularly in Auckland, but also in selling times at 26 days.
Wellington) and will continue to grow over the next few
years. If the early indications outlined above are true,
demand may already be easing and with supply increasing,
we could be at the turning point for a typical boom/bust OPPORTUNITIES
cycle.
High demand enables all types of property to sell and
Big increases in property values have occurred throughout be recycled and this can be an ideal time to move on.
the Wellington region, but effects vary between locations
and types of property. Notable variations are: Properties are now, on average, worth noticeably more
than in the previous peak in 2007 and those that have
Lifestyle properties with an average increase put plans of moving or downsizing will now find they
closer to 5% have considerably more equity than at this time last
Rental properties having very high increases of year.
30% to 70%
Vacant section sales having lower than average The average Wellington home is now $65,000 to
increase at an average of 14% $140,000 more than it was last year. Waiting to get the
Low value increases for older apartments - most out of the market is a natural inclination but when
10% to 20% the market turns properties are more difficult to sell.
Pre 1940 dwellings had average increases So if you have thought about a change, this could be an
over 30%. opportune time.
Older ownership flats had slightly above
average increases - 24% to 28% New building has never looked so good. It’s the supply
Low increases in: Eastbourne, Central Wellington, and availability of builders that is a constraint. Pricing
Pinehaven,Mana, Paekakarki, and Pukerua Bay. is now more favourable compared to existing
High increases in: Alicetown/Moera, Mt properties, and in many areas, older homes have gone
Victoria, Porirua East/Ranui Heights, Taita, up in price to a greater extent than new and near new
Waiwhetu/Fairfield/Waterloo. homes.
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 4
PROPERTY UPDATE
TAURANGA Cooling for the summer?
Over this past year, residential real estate in Tauranga has The latest statistics from Core Logic saw a year on year
seen a significant uplift in activity and values. A good growth in value of 27% from October 2015 to October
degree of the activity is engendered by home purchasers 2016,and an average sale price of $651,725.
and investors from Auckland in conjunction with a pent-up
local market that has taken advantage of the life in the However, recent signs are that perhaps the market has
market to sell and move. taken a downturn. Estate agents are reporting lower
success rates at auction, some ‘disappointed vendors’ and a
From December 2014 through to October 2016 the growth in tendency for property having to go through a more conven-
property values accelerated. The graph below indicates the tional sales process, e.g. post auction conditional sales
upward trend in values over this period and interestingly contracts.
while not at the same value levels, the rate of growth for
Tauranga City was greater than that of Auckland. It would seem that the measures introduced by the Reserve
Bank in late July are having a dampening effect on market
$1,000,000
Price trends in Auckland & Tauranga BY ROSS FORSYTH, Registered Valuer, ross@prendos.co.nz
activity – not just in Tauranga – but across the nation.
SOURCE: REINZ
$900,000
It could be that purchasers are now more aware of a
$800,000
potential slowdown in activity with even the possibility of
$700,000 values falling,and are therefore being more wary of jumping
into what has been a very ‘hot market’.
Median Sales Price
$600,000
$500,000
In addition, New Zealand is now coming to grips with the new
$400,000 American Presidency and the potential outcomes that might
$300,000
arise from some very unclear policy directions espoused
during the election. The outcome of such policies (whether
$200,000
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 they come fully into effect or not!) are certainly weighing on
Auckland Tauranga Mount Maunganui/Papamoa New Zealand Excl. Auckland
the minds of decision makers.
This market upturn was verified by selling agencies who all It is quite possible that the costs of finance may well rise as a
reported a near “frantic” market that saw sales prices surge direct consequence of these unsettled times. Should this
ahead - with each new sale setting a new benchmark.This occur, it could impact significantly upon both vendors and
trend has been echoed by ‘the days on market’ for proper- purchasers, and indeed some of this current slow down may
ties, where this indicator of key market activity showed as well be attributed to this uncertain picture going forward.
the number of days on the market fell, values rose.
As to the future? In our experience predicting the direction
of the market over the Christmas/Summer vacation period
is extremely difficult, as sales activity and data is more
SOURCE: REINZ difficult to gather. But, if all the above slowly rolls forward ,
we may have a more stable and predictable real estate
market going into the New Year.
What would happen should all the negatives and worst fears
come together speedily? Then the future direction has the
potential to be bleak. Softly, softly could well be the mantra
for the next 2-3 months!
BY ROSS FORSYTH, Registered Valuer
ross@prendos.co.nz
Auckland too THE PLACE DESIRED BY MANY? Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 6
LVR Restrictions Hit Home...
Top Auckland Valuer Gordon Edginton describes the impact of new
Loan to Value Ratios on the Auckland Property Market.
The new loan to value ratio (LVR) restrictions imposed by A chronic housing shortage brought about by underbuild-
the Reserve Bank requiring an investor have a 40% deposit ing of homes since the mid 2000’s. This has been exacer-
to buy an investment property which were imposed in July bated by Auckland Council’s red tape around resource
this year have had an almost immediate effect in slowing consent procedures plus restrictions on land supply for
market activity. housing. (Refer also to the article ‘Watch this Space’ on
page 14 for more information).
Sales volumes for properties sold in August, September and
October are down to 2,300 per month from the average It is estimated that Auckland currently needs 40,000
monthly volume seen over the past three ‘boom’ years of dwellings - and this is increasing as the population grows.
3000 sales per month. Consents are only tracking around 9,600 in the last year:
about half of what is actually needed to meet population
In past cycles, a figure of 3000 + sales /month in Auckland growth.
represents a booming market. Sales in the mid 2000 range
reflect a ‘steady as she goes’ position, under 2000 is Even if consent numbers rise dramatically from this level,
somewhat of a slump, and less than 1500 sales is a recession. there will not be enough builders and tradespeople to build
the homes we need.
on the back of the LVR handbrake. Something similar Investors chasing income and capital yielding assets for
happened at the end of 2015 when the Reserve Bank their retirement. Property is an easily understood and
imposed their initial round of LVR restrictions requiring a managed investment class. While rental returns are now
30% investor and 20% home buyer deposit. Activity then very low (2.5% - 4% range), the upside of capital gain
slowed for 3-4 months over Summer. But, come February (10%-20% per annum) far outweighs this. Risks of a
2016, the market took off again. hence the latest round of decline are low, and even so, in past declines, prices have
restrictions. only fallen 10%.
Most probably, the same thing will happen this time around. Asian interest in NZ property is high, and likely to remain
Come early 2017, market activity is expected to start so. Most of that money ends up in Auckland property.
ramping up again until the next possible round of Reserve
Bank intervention requiring even greater investor and first Auckland’s median house price hit a new record of
home buyer deposits. This slowdown is likely to be tempo-
rary. There are a number of reasons why there is no sign of a winter months. This slight weakness through winter
true, underlying slowdown: reflected the new LVR rules and slow down of activity.
Historically low interest rates are likely to stay low for some While the market takes a breather it is possibly a good
time. This ability for homeowners to service greater levels time to buy without the frenetic hype and bidding wars
of debt has simply been transferred into larger mortgages that have been seen earlier this year.
and higher house prices. Rates will potentially be cut again,
as the Reserve Bank has dropped the OCR to 1.75% giving
confidence to borrowers to lock in more debt. sales activity as happened in early 2016. It will be interest-
ing to see how the market reacts.
The availablity of ‘cheap’ money from banks is behind much
of the current price pressure. As 2017 will be an election year, the uncertainty stemming
from this will hang over market sentiment later in the year
Booming migration numbers of a net 70,000 gain in perma- and likely cause another slowdown in sales as occurred at
nent long term arrivals. The soaring migration numbers put the last election in 2014. An unfavourable result will cause
greater demand on housing as most migrants (60%) tend to
But Auckland’s pressing housing needs are not being met.
Migration flows to and from New Zealand are one of the With booming migration and a supply shortage, prices are
major drivers of the housing cycle markets. Past booms in likely to continue to rise even on lower sales numbers. The
the mid 2000’s and 1990’s were directly linked to large net rate of growth is slowing which is a good thing. Short of an
migration inflows. This boom has seen double the population economic collapse, major international failure, or more
growth of the past, but prices have only risen by 15% per serious earthquakes, real estate still looks like a very safe
annum. bet.
THE CHRISTCHURCH
REBUILD
Cracks are beginning to show
Over five years on from the magnitude 6.3 earthquake The intention of the building regulatory system is to
of the 22 February 2011, the Prendos Christchurch office ensure that building work can be carried out more
continues to provide a range of specialist property efficiently while maintaining quality. Our building
consultancy advice to the region. performance based regulatory system requires
consents, management and observation of the works
“The damage to property in Canterbury was substantial, and sign off to achieve code compliance.
and the total value of construction work to be complet-
ed over the period of the rebuild is estimated to be Rory constantly reminds his Christchurch team of
about $40 billion. The Reserve Bank estimates that the consultants to ask questions on the building control
rate of rebuild activity underway in Canter-bury is regime, not just of him, but of his senior colleagues
around 1.5 percent of potential GDP per annum, and that across the company.
the rebuild will extend beyond 2020”. Christchurch
Director Rory Crosbie states. Given that 2016 has seen Canterbury’s busiest year ever
for construction, the potential for getting it wrong
As predicted, rebuilding greater Christchurch has had a increases. Due to the sheer volume of activity across the
huge social, cultural and environmental impact on the greater Canterbury region, construction mistakes, both
local area and for the entire country. As one of the in design and implementation of the intended design
biggest economic undertakings in New Zealand’s have, and will continue, to be made.
history, the challenge of ensuring that the rebuild and
repairs of damaged buildings are completed safely and The increase in the variety of materials from overseas
correctly is huge. also adds to potential future problems.
Prendos consultants understand that to achieve safe,
healthy, durable homes and buildings all building work Currently, there is huge demand
must meet strict requirements.The building regulatory
system sets out a framework to promote good building for Rory and his team to revisit
practice. However, many in the building and construction completed repairs as a result of poor
industry don’t fully understand this system which scope, design and workmanship.
comprises:
The Building Act 2004: the primary legislation “Inevitably, we are also getting busier providing advice
governing the building and construction industry; on matters of dispute. At a recent mediation, represent-
ing the claimant, a total of 26 people were present
The Building Code contained in schedule 1 of the representing the various parties caught up in the
Building Regulations 1992 which sets the dispute!”
minimumperformance standards buildings must
meet; and “It was one of those things, a dispute caused by a defect
resulting from all those involved working in a pressure
Building Regulations which detail particular cooker type environment created by the need to adapt
building controls (for example, prescribed to new construction techniques under tight timescales
forms,list of specified systems, definitions of and tight budgets” Rory explains.
‘change ofuse’ and ‘moderate earthquake’, levies,
fees and infringements). While the pent up activity is predicted to last until 2020,
Rory believes it will stretch far beyond that date.
These requirements determine how work can be done
and who can do it, while ensuring that the system has
checks and consumer protection in place.
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 8
FOCUS | EARTHQUAKES
The November Earthquakes
and subsequent flooding
events were incredibly
unsettling for all involved.
Earthquake expert & Director
on what Commercial Property
Owners should do in the event
of an earthquake.
1. Notify insurers of the event and that a
claim will follow.
2. Retain the services of a structural
engineer to :
Complete a visual inspection of the
interior and exterior of the
property, document the findings
and prepare an earthquake rapid
SEISMIC
assessment in accordance with
shift
MBIE Building Performance
guidance.
Make recommendations on
whether the building is safe to
re-occupy or whether further more
detailed investigations are
required.
3. Take urgent action to make building safe,
secure, weather-tight and sanitary. A
building surveyor can assist and manage
this process.
4. Record any remedial work done and take
photographs for future insurance claim
purpose.
5. Get essential services, like toilets and
water systems, repaired. Ideally use
existing contractors who maintain the
specified systems to complete this work.
6. Keep records of everything the repairer
replaces (and keep a copy of the bill).
7. Hire a structural engineer, building
surveyors and quantity surveyors to
complete a fully detailed damage
assessment and scope of repairs.
8. Use damage assessment information to
determine the repair methodology and
to prioritise repair works.
Wellington CBD post 7.5 magnitude quake | November 14 2016 | Image source: Fairfax Media
FIRE IS THIS THE N Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 10
FOCUS | FIRE
E NEW LEAKY?
BY JOSH RAWLINSON, Building Surveyor, josh@prendos.co.nz
It has become apparent through weathertight- WHAT IS PASSIVE FIRE
ness remediation projects on numerous PROTECTION?
multi-unit dwelling and apartment buildings, that
there are systemic issues with Passive Fire Passive Fire Protection is an integral part of a
Protection Systems within the building industry. building and is vital to both life safety and
property protection. Passive Fire Protection
The extent of the defects uncovered to date is contains a fire, or slows the spread of fire
wide-ranging. Remediation of these defects is through the use of fire rated walls, floors,
resulting in additional costs to unsuspecting ceilings and fire stopping of penetrating items
building owners, in the form of significant costs such as pipes, wires, ducts and electrical
for rectification of non-compliant installations conduits etc.
and project delays caused.
It is essential to maintain and undertake
As a result of this, it is therefore prudent to remedial actions on defective Passive Fire
scrutinise an existing building before an Protection systems to ensure they can continue
alteration project commences to determine if to provide their fire and smoke separation
there are any potential fire protection issues that function within a building. If a system is found to
could impact a proposed scope of works. be compromised or defective it should be
remediated as soon as possible, as the fire
BUILDING ACT 2004 safety of the building could potentially be
reduced.
Alterations to existing buildings trigger section
112 of the Building Act, whereby a building DESIGN SPECS + INSTALLATION
consent authority (Council) must not grant a
building consent for the alteration of an existing Passive Fire Protection systems must be
building, or part of an existing building, unless it is correctly designed, specified and installed.
Specification and installation is however being
comply, as nearly as is reasonably practicable, overlooked by designers and building officials
with the provisions of the Building Code that that over-rely on fire-engineers and producer
relate to means of escape from fire. statements. Generic design, incorrect product
specification, shortcomings with technical
Compliance with section 112, in relation to means documentation, poor workmanship and
of escape from fire, typically used to constitute inadequate inspections has potentially arrived
at another systemic failure within the building
alarms, escape routes and exits. The definition of industry.
‘means of escape from fire’ in the Building Act
however encompasses passive protection
features in a building that are required to assist in
protecting people from the effects of fire in the
course of their escape from the fire. In light of
this, Councils have begun requesting rectification
of defective passive fire systems.>> CONTINUED
Design, specification and installation are not
straightforward processes and attention to detail is
critical. There is a misconception that Passive Fire
Protection systems are generic between products
and manufacturers, but they are not. Sealants for
example are specific to penetration types and
construction materials. Likewise fire collars are
specific to pipe material types and sizes, and must
also be specifically tested for floor waste applica-
tions.
The Acceptable Solutions which support the
Building Code clauses for Protection from Fire
require the design and construction of Passive Fire
Protection systems to be identical to those of the
THIS IS NOT OK prototype specimen used in the standard test to
establish their fire rating. Simply put, this means
products specified for use shall have been tested for
ABOVE: an incorrectly installed fire
collar. The collar should be fixed the type and size of the gap or penetration, and for
directly to the underside of the the type of material and construction used in the fire
concrete floor slab. separation. Poor understanding of this results in
products being used beyond the scope of their
BELOW: Example of a systemic issue tested parameters and in the formation of ‘ad-hoc
where fire rated sealant not tested or systems’ that have not been subjected to the
certified for the construction type is relevant standard fire tests. In multi-storey
used yet labelled as being installed in buildings this issue could involve hundreds of
accordance with the relevant test penetrations (e.g. collars, floor waste seals,
standards. intumescent sealants, intumescent wraps, dampers),
each requiring access to allow re-installation and
reconstruction of floors, walls or ceilings. The end
result, significant additional costs associated with
remedying the problems.
Documentation verifying tested system specifics
can be difficult to obtain. There is a perception by
some manufacturers and suppliers that due to
concerns about confidentiality, they do not have to
supply evidence that their products or systems have
been tested. This is ultimately problematic, as it is
the end user who is responsible for ensuring that the
products they use are compliant and tested to the
relevant standards. Test documentation should not
be kept secret, as it only confirms how a
product/system performs within a set of standard
test parameters for a particular construction type
and time period.
To fully comprehend a system, and to determine if a
product is installed correctly, test reports should be
read in conjunction with glossy manufacturer’s
literature
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 12COMMERCIAL PROPERTY
FLAMMABLE
CLADDING
BY SEAN MARSHALL, Director + Chartered Building Surveyor, seanm@prendos.co.nz
ABOVE | The Lacrosse Apartments Fire , Melbourne .
Image Source: Owners Corporation Network
In recent years there have been a number of fires that
have spread beyond the original fire source via non New Zealand we use the same standards as Australia
compliant combustible aluminium composite panels for fire rating and determining the combustibility of
(ACP) and other combustible materials. Of note the materials.
Lacrosse apartments in Melbourne and The Torch
apartments and Sulafa Tower in Dubai. Whilst no loss To date, MBIE has published a guide Reaction to fire
of life, there was substantial property loss and repair performance of aluminium composite panels. This
costs. guide only considers ACP claddings and not other
combustible materials that may be use in the construc-
These ‘cladding fires’ have sparked awareness with tion of the external walls of a building.
insurers underwriting such buildings as well as body
corporates, property developers and people living in The NZ Building Code is clear in regards to the
them. functional requirements of external walls and
claddings in terms of fire performance. However, it is
The Melbourne fire took just 11 minutes for the flames all too easy for consultants to provide performance
to spread from a balcony on the eighth floor up to the specifications without actually specifying materials
21st floor forcing the evacuation of 400 people. and building systems that demonstrate compliance.
Fortunately, we have not suffered a major building fire Prior to specifying a cladding system, it is important
event as a result of non compliant combustible for building designers and officials to understand the
claddings. However, given the number of buildings requirements of the building code and not necessarily
incorporating ACP and other combustible claddings rely on a fire engineers fire safety report which
and the fact that there is a wide selection of both fire traditionally is a performance / design strategy as
rated and non fire cladding materials and systems apposed to a construction specification.
available in the market, this could be a potential
problem in New Zealand. Given the potential for cladding fires in New Zealand
and the now apparent lack of understanding around
Following the Melbourne fire, the Victorian Building passive fire design, Prendos is very cognisant of not
Authority (VBA) published an Industry Alert highlight- only building weathertightness but also achieving
ing the issue and clarifying building code compliance through design and specification, compliant fire
pathways. This document is of relevance because in performance.WATCH
this space
The Auckland Unitary plan is a game changer not just for To assist clients with the identification of development risk
Auckland but New Zealand as a whole. Prendos work with specialist external consultants to gather
advice on a sites geotechnical, environmental and service
Provided it is effectively implemented it will allow Auckland infrastructure.
to accommodate its inevitable growth. For property
investors (including managed funds) looking to acquire Once the zoning of a site has been changed the intensity of
property, add value and then on-sell the benefits of the development of any given site could depend on the
Unitary Plan, zoning changes have presented them with geotechnical suitability, risks associated with foundation
longer term development opportunities. options and groundwater effects. On brownfield sites
completing an environmental investigation at due diligence
For example, light industrial property on the city fringes, stage is essential.
close to good transport links, with a change of use from
Business 4 Zoning to Business Mixed Use, could now be Reviewing the LIM and completing site walkovers to
intensively developed to accommodate much needed determine the site characteristic may allow conclusions to
multi-unit light commercial and residential development. be made on the likelihood of elevated contaminate
concentrations. Risks associated with fill material on
During the due diligence stage of site acquisitions, Prendos brownfield sites where they will require characterising to
is assisting with ‘bulk and massing’ studies to show determine the appropriate disposal management options
development opportunity along with condition reporting on also require consideration.
existing building stock to provide full visibility on the
existing condition. If the pre-purchase due diligence period is tight the
purchaser is made aware that the consultant’s ability to
Understanding the condition of buildings prior to purchase obtain advice from local supply authorities to determine
allows for a possible discount in purchase price. It also how possible limitations regarding electrical and hydraulic
ensures that when purchased any urgent deferred mainte- infrastructure will impact the future development, can be
restricted.
statutory regulations and lease clauses.
Once all factors gathered during the technical due diligence
“Seasoned investors understand the value of obtaining of a potential investment opportunity are known Prendos
good advice. They have a duty to their shareholders to cost consultants can assist with the preparation of
maximize certainty and to maintain the holding income of development appraisals showing the potential future value
their assets until such time as they are altered, refurbished of the proposal. They can also work with the investor, keen
or demolished for redevelopment. Obtaining a building to protect future value, through offering advice on the
survey report prior to purchase of a commercial property or investment required on the existing assets over their
prior to the redevelopment of a property, will ensure its remaining life and the value of any lease make good
existing condition is documented, and potential issues and liabilities associated with the property.
recommendations for any necessary repairs or refurbish-
ment costs are identified”. Growth always brings challenges and opportunities. While
enormous long term value enhancement can be realised
Realising the value add with intensification of use on any through intensive development, there will be those chasing
given site comes with risks. Investors and developers try to such opportunities who will not seek the expert advice
identify and evaluate those risks through obtaining expert required to reduce the risk of their property decisions. As a
advice. result some will fail. Watch this space!
While bulk and location studies can highlight the potential
future development opportunity for a site, the level of
funding and time required to realise the potential will vary. BY RORY CROSBIE, Director, rory@prendos.co.nz
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 14COMMERCIAL PROPERTY The Auckland Unitary Plan is a game changer not just for Auckland, but New Zealand as a whole - Director Rory Crosbie explains.
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 16
COMMERCIAL PROPERTY
LONG TERM
MAINTENANCE PLANS
It’s all in the detail...
It is now just over five years since the Unit Titles Act 2010 WHAT SHOULD BE IN THE PLAN?
came into force in New Zealand.
The contents of a LTMP should include each building
With the introduction of the Unit Titles Act 2010, it became element that would be normally subject to maintenance
mandatory for every unit title development in New Zealand during the life of the building and generally under the
following headings:
regardless of the size of the development. Due to the
onerous nature of this new legislation, the government The common property (e.g. common landings/lobbies,
allowed a grace period for bodies corporate to arrange for entrance foyers, grounds, pools).
the LTMP to be provided. The building elements (e.g. roof, cladding, joinery).
The infrastructure (e.g. plumbing, electrical, ventilation,
emergency equipment, security etc.).
THE LEGAL PART
An important caveat to the above however is that the body
(1) A body corporate must establish and regularly maintain a corporate can opt out of maintaining any particular items
long-term maintenance plan. that they choose by AGM/EGM but these items will need to
(2) A long-term maintenance plan must cover a period of at be identified in the plan.
least 10 years from the date of the plan or the last review of
the plan. Each of the building elements recorded on site (preferably
(3) The purpose of a long-term maintenance plan is to— by an experienced chartered or registered building
(a) identify future maintenance requirements and estimate surveyor), are assessed for typical life cycle based on the
the costs involved; and current condition/maintenance regime and other on-site
(b) support the establishment and management of the data (exposure, location, material used etc) and added to an
funds; and inventory. This inventory then forms the basis for calculat-
(c) provide a basis for the levying of owners of principal ing the LTMP.
units; and
(d) provide ongoing guidance to the body corporate to It is also important to note that long term maintenance
assist it in making its annual maintenance decisions. plans do not include maintenance items that are required on
a more regular (once a year or greater) basis such as window
These are the minimum legal requirements for any LTMP
for a unit title development to contain. As with most wash etc. These are specifically excluded from this
legislative wording, the requirements are broad and do not legislation.
go into particular detail of how the plan should be presented
and what particular data should be captured. The basis for So, without the benefit of a crystal ball, how do you
calculating future maintenance is also not specified in the calculate when a particular building element will require
act. maintenance or replacement?YOUR LONG-TERM MAINTENANCE
PLAN MUST BE RENEWED AT LEAST
EVERY THREE YEARS. WITH EACH RENEWAL THE PLAN
MUST COVER A PERIOD OF AT LEAST 10 YEARS.
NO CRYSTAL BALL? Under section 116 (part 3), the plan should also estimate the
costs involved in the maintenance of the building and assist
There are a number of tools available for us to calculate the the body corporate to establish a fund (although as in
approximate maintenance or replacement period of a section 117 (1), the body corporate can, by special resolution
particular building element. The Royal Institution of decide not to set up a fund at all) and provide a basis for
Chartered Surveyors has produced a comprehensive guide levying owners.
to the life expectancy of building components that gathers
data on a number of building elements based on the Replacement or maintenance costs for each building
experience of building surveyors. element are assessed using our own in house database of
elemental rates compiled by our team of professional
The guide was produced to provide ‘in the field’ data on life quantity surveyors. This is based on current market rates for
expectancy, rather than rely on laboratory testing data, and each region and is regularly updated which is particularly
provides a life expectancy range based on environmental important in the present ever-changing construction market.
conditions, design, construction, quality of materials etc. We then calculate average construction price inflation to our
This is assessed by carrying out a desk top study and on-site cost model to give an estimate of replacement cost at the
evaluation of the building. time the particular building element is due to expire .
Experienced surveyors carry out on-site analysis of each The most accurate cost data however is always to seek
building element, recording its current condition, mainte- pricing from tendering contractors at the time the replace-
nance regime (or lack of), quality of construction and ment/maintenance becomes due and pricing contained with
whether any defects exist that require more immediate the plan should be used as a guide only.
Once the costing exercise is complete, the plan also
There are also other important considerations to make when calculates an indicative levy total for each year for the body
reviewing a buildings maintenance requirements such as; corporate to consider.
does the particular building element comply with current
legislation?, is it economic to replace the particular building Section 117 of the act provides further details of the
element (even though it has not reached its life expectancy), requirements of a fund:
is there more superior technology for a particular building
element that would mean replacement is desirable (particu- (1) A body corporate must establish and maintain a long-term
larly with building services) etc maintenance fund unless the body corporate, by special
resolution, decides not to establish a long-term maintenance
So now that you have assessed when a particular building fund.
element should be maintained or replaced, what else should (2) The fund may only be applied towards spending relating
be included in the plan? to the long-term maintenance plan.
(3) The body corporate must, by special resolution, approve
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 18CASE STUDY
Long Term Maintenance
Plan for an Historic Building
When good roofs go bad....
Prendos was engaged to provide a LTMP for a body
corporate of a prominent historic building on Wellington’s
waterfront. The building is listed with heritage New Zealand
any amount to be spent on any one maintenance item if the and has been converted into apartments.
amount exceeds the amount specified for that item in the
long-term maintenance plan by more than 10%. Having reviewed the building and building elements, it
became obvious that although the buildings façade had
As described in section 117 above, there are restrictions on been well maintained, the key issue was that the current
the use of the fund, and it cannot be used to fund anything roof condition and configuration was problematic and life
other than what is included in the plan (ie, cannot be used to expired.
fund improvements or other work outside of the plan).
The body corporate had gone about a regime of reactive
repairs on the roof to address leaks that had been occurring
With older or more complex buildings, we would recommend over the years.
reviewing the plan at shorter intervals to ensure accuracy of
the replacement and cost data. Following discussion with the body corporate, it was agreed
that the LTMP allowed within it not only the estimated cost
Are long term maintenance plans just for body corporates? for replacement of the failed roof coverings but also for the
Absolutely not. Of course it is only unit title developments simplification of the roof and replacement with a more
that are subject to the unit titles act but the concept of long durable material, therefore extending the life of the
term maintenance planning is transferable to all types of built replacement roof further.
asset. We have been involved in providing plans for
warehouse buildings, offices, aged care facilities, retail This decision making in producing the LTMP was welcomed
premises etc. by the body corporate and has greatly assisted with their
future project planning.
ADVICE
As with all property decisions, it pays to talk to an expert. The
legislation was essentially put in place to avoid properties
being put into disrepair by lack of, or poorly thought out,
maintenance decisions. By engaging an expert such as a
chartered or registered building surveyor to produce the long
experience in building related issues and practical advice on
building maintenance. In the long run, a well maintained
building provides a safe building environment, minimises
defects and retains (or even enhances) its value.PHILIP O’SULLIVAN , Director + Registered Building Surveyor, Auckland. Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 20
&
BODY CORPORATE
MAINTAINING BUILDINGS
HEALTH + SAFETY PLANNING
BY PHILIP O’SULLIVAN, Director, philip@prendos.co.nz
From the moment the various parts of a building are thus more prone to corrosion. This requires
brought together, an inevitable process of decline scaffolding and thus considerable cost.
commences; only slowed by positive interventions
we call repairs & maintenance. So we suggest it's time to get smart about
maintenance and design as well, so buildings so can
When homes are coalesced together as unit title
complexes, rules are necessary to influence and The sad truth is that we in New Zealand have been
govern human behaviour. remiss in both maintaining our buildings and in
failing to design in safe access to do so. This has
Accordingly, the need for long term maintenance spawned an industry of abseilers which are
plans (LTMPs) is enshrined within the Unit Title Act. satisfactory for simple tasks like cleaning, but not
Some Bodies corporate (BCs) see this as quite for more complex maintenance and repair tasks.
sensible, planning and saving to help fund future
maintenance, so those that enjoy the earlier low Even if the work can be done, how is it inspected in
maintenance years help contribute to the deteriora- the first instance by the right people to specify
tion that is inevitably happening around them. what is required, and then to check that it has been
done correctly.
Others see it as an impost: another unwelcome
expense, so they pay the least possible to get a ‘Smart’ means considering access and inspection
when carrying out other maintenance work. For
and then approach maintenance in the same example BCs should arrange a full roof inspection
manner, always choosing the least expense - no while scaffolding is in place to paint wall cladding.
stitch in time for them. The lack of immediate [An aside - painting metal roofs may make them
consequences allows this behaviour to become the look nice, but as the hidden laps etc fail first, it is
norm for many BCs. The downstream consequenc-
es can be significant - the worst case I have seen this for later roof replacement].
demolition was the only realistic option.
'Safety in design' means providing for safe access
Health & Safety law on the other hand is loaded for inspection, maintenance and repair e.g. roof
with immediate and serious consequences. This is access and fall restraints. It could mean permanent
intended so as to influence all those who control edge protection or, for larger buildings, built-in
decision making and thus outcomes. It has got building maintenance access rails and units.
Prendos has designed maintenance access rails
The simple task of inspecting roofs for example has into the remediation of the 12-storey Nautilus
now become much more complicated. Using Apartments in Orewa. We recently included roof
drones has been suggested and can be useful for a anchor points into the building remediation of a
'look', but to determine the actual condition of a 5-level apartment building in Mt Eden.
roof and whether and when it needs to be replaced,
still needs to be done by close inspection. With long Prendos provides LTMPs and we can include safe
run metal this involves temporarily removing some access planning if requested. We also provide
roof sheets and examining the hidden areas under asbestos inspection services - an asbestos register
laps and flashings that are unwashed by rain and is a requirement for our not-so-new buildings.SPECIAL ANNOUNCEMENT
The Design team is really excited to tell you about a major change that we have
been working on. In 2009, when the team was founded, the focus was purely on
remediation design and documentation. Since then, we have actively sought to
grow the repertoire of our practice to include commercial and residential
projects. Now, it is time to launch a brand that reflects that capability...welcome
to Respond-Architects! We will be trading as Respond-Architects, and our legal
entity will remain Prendos New Zealand Ltd. For more information please visit
our website or check out our Facebook page @respondarchitects
RESPONDARCHITECTS.CO.NZ
COMMERCIAL COMMUNITY RESIDENTIALPrendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 24
PROJECTS
CUMBERLAND HOUSE
Rejuvination of a classic
freshness over decades without re-oiling.
volcano amongst Devonport’s exclusive They chose a turquoise-grey stain the colour
heritage-zoned streets, Cumberland House, of which was to match the lichen growing on
designed by Neil Simmons in the late 1980’s is the exposed volcanic rock nearby. It is also
an exciting example of enduring modern very close to the colour of naturally
architecture. weathering pine.
When current owners Garth and Vivienne “When our forestry friends visit, few
Cumberland bought the property in 2013, they recognise the cladding for what it is.
could see it required modification.
Pine can be sustainably treated, dressed
With an appreciation for its ultimate potential, and coloured to outlast imported timbers
they engaged Respond—Architects (formally and look equally exotic.”
Prendos Architecture NZ Ltd) to provide the
technical solutions to dampness and water “We removed 10 tonnes of plaster and lath
ingress. and replaced it with seven cubic metres of
timber which represents 7 tonnes of carbon
“Essentially the house was completely stored for 50 – 100 years.’
future-proofed” said Respond—Architects
Director, Natasha Cockerell. Leaky aluminium joinery was replaced with
“There was not only the reclad – over double-glazed cedar sashes in pine frames.
a cavity installed at the same time – but also a
new roof, double-glazing, solar power, screeds “In hindsight we wish we had used another
of flashings and upgrades to existing insulation.” NZ timber for the joinery. A locally grown
eucalypt or another conifer would have
The Cumberlands are unashamedly wood added to our delight at the successful NZ-
enthusiasts (Garth having worked nearly 30 wood orientated transformation of a
years in forestry) so found it easy to make the masonry building”.
somewhat unusual choice of rusticated,
band-sawn, vertical shiplap treated pine The overall result is a subtle but striking
cladding. transformation of the property that is both
durable and beautiful. For Garth and
Auckland Council was initially hesitant of the Vivienne,this is the best result possible.
chosen cladding; stipulating that the pine was
to be oiled and stained in a heritage colour to EDITORS NOTE: Cumberland House
fit in with neighbouring houses. is currently entered in two categories
in the Resene Timber Awards, which
The Cumberlands wanted the house to blend are judged in early 2017. We will keep
with Mangauika and to maintain its pristine you posted!SPECIAL FEATURE
BREAKING BOUNDARIES
BY SACHA HARWOOD et al.
Gender inequality in the workplace is a long It is Marianne’s view that company growth was a
accepted reality. There are additional challenges catalyst for change.
faced by women in employment, and we only have
to look at recent media reports to realise this issue As the company has grown, Prendos moved away
is very much still at the forefront of international from more traditional Kiwi company values, where
employment relations. the women predominantly did secretarial and
typing work and the management roles were
In an industry commonly viewed as male-dominat- predominantly held by the men in the office. The
ed, Prendos is unusual. There are women at senior company has benefitted from a wide range of
levels in both technical and management positions, skilled employees and consultants - men and
and a number of women in other less traditional women from New Zealand and around the globe -
roles throughout the company. all of whom have bought valuable knowledge and
experience to the company. By recognising the
Maree Stevenson, National HR Manager, believes benefits of diversity, Prendos has been able to
this is a direct result of initiatives to genuinely accommodate and retain these skills and many
employ the best person for the position, despite women working for the company have since had
traditional stereotypes. It is her view that industry families and returned to Prendos.
and company policies have a huge impact on the
employment of women. Prendos boasts two female directors in architec-
ture and structural engineering, and the IT, CAD
“Women in management and non-traditional design and Quantity Surveying teams are also
industries, such as property and construction, tend headed by mothers with young families and the
to be outstanding in their field as they have most Wellington Regional Office now has its first female
often had to prove they are better than their male manager, registered building surveyor, Hayley
counterparts to compete and survive. Women in Parkes.
non-management positions in these same
industries are also often sought-after, but ‘drop out’ Women are moving up the career ladder within the
due to family reasons or changed circumstances. company, and being supported in study and further
Often companies will not have the structure in place education, all whilst recognising the importance of
to facilitate their return to work. This reduces the children and family life.
likelihood of women moving into management
positions, and without strong leadership and Gender inequality in the workplace has been
support these existing patterns will not change.” experienced by many of the women at Prendos,
Maree comments. It is a sentiment echoed by many however, as attitudes evolve, the skills and
of the women at Prendos. experience they can offer are becoming more
widely recognised and they are being given the
It is clear, however, that attitudes are evolving. This confidence and flexibility to excel in their roles.
is evident in the experience of Marianne Moloney,
IT Facilities Manager for Prendos who has been It is clear that Prendos is making significant inroads
with the company for over 10 years. She comments: by breaking down the stereotypes and traditional
“I have seen enormous changes in the way women barriers to these non-traditional industries and
are viewed in the workplace while I have been here. roles.
Women have a far more positive experience now”.
HAYLEY PARKES, Wellington Regional Manager + Registered Building Surveyor.
Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 26SPECIAL FEATURE
BREAKING BOUNDARIES
BY REBECCA WARD et al.
Gender inequality in the workplace is a long It is Marianne’s view that company growth was a
accepted reality. There are additional challenges catalyst for change.
faced by women in employment, and we only have
to look at recent media reports to realise this issue As the company has grown, Prendos moved away
is very much still at the forefront of international from more traditional Kiwi company values, where
employment relations. the women predominantly did secretarial and
typing work and the management roles were
In an industry commonly viewed as male-dominat- predominantly held by the men in the office. The
ed, Prendos is unusual. There are women at senior
levels in both technical and management positions, skilled employees and consultants - men and
and a number of women in other less traditional women from New Zealand and around the globe -
roles throughout the company. all of whom have bought valuable knowledge and
experience to the company. By recognising the
Maree Stevenson, National HR Manager, believes benefits of diversity, Prendos has been able to
this is a direct result of initiatives to genuinely accommodate and retain these skills and many
employ the best person for the position, despite women working for the company have since had
traditional stereotypes. It is her view that industry families and returned to Prendos.
and company policies have a huge impact on the
employment of women. Prendos boasts two female directors in architec-
ture and structural engineering, and the IT, CAD
“Women in management and non-traditional design and Quantity Surveying teams are also
industries, such as property and construction, tend headed by mothers with young families and the
to be outstanding in their field as they have most Wellington Regional Office now has its first female
manager, registered building surveyor, Hayley
counterparts to compete and survive. Women in Parkes.
non-management positions in these same
Women are moving up the career ladder within the
due to family reasons or changed circumstances. company, and being supported in study and further
education, all whilst recognising the importance of
to facilitate their return to work. This reduces the children and family life.
likelihood of women moving into management
positions, and without strong leadership and Gender inequality in the workplace has been
experienced by many of the women at Prendos,
Maree comments. It is a sentiment echoed by many
of the women at Prendos. experience they can offer are becoming more
widely recognised and they are being given the
confidence and flexibility to excel in their roles.
is evident in the experience of Marianne Moloney,
IT Facilities Manager for Prendos who has been It is clear that Prendos is making significant inroads
with the company for over 10 years. She comments: by breaking down the stereotypes and traditional
“I have seen enormous changes in the way women barriers to these non-traditional industries and
are viewed in the workplace while I have been here. roles.
Women have a far more positive experience now”.Chris Ross and Hayley Parkes, Registered Building Surveyors, Prendos Wellington.
THANK YOU FOR YOUR SUPPORT
At Prendos, we’ve built our business around really understanding our clients.
Every day our specialist consultants provide building surveying, property valuation,
project management, cost consultancy and engineering advice across New Zealand,
providing solutions and impartial support that our clients really trust. With a team of 115
people around the country, we have a range of experience to suit every level of enquiry.
Please contact us for more information, we would be glad to hear from you.
AUCKLAND TAURANGA WELLINGTON CHRISTCHURCH
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