wellington’s boom · feature article continued the rental market is a more reliable gauge of a...

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WELLINGTON’S

IS IT ALREADY BUST?BOOM

Oriental Parade, Wellington

Prendos New Zealand Ltd | PROPERTY TALK SUMMER 2017 | 2

IN THIS EDITION

PROPERTY UPDATE

Wellington’s BOOM, is it aleady bust?.........3BY MAX MEYERS, Valuer

Tauranga, Cool for the Summer?.................5BY ROSS FORSYTH, Valuer

Auckland: The place desired by many?........6BY GORDON EDGINTON, Valuer

FOCUS ON...

The Christchurch Rebuild.............................8BY RORY CROSBIE, Director

Seismic Shift...................................................9BY RORY CROSBIE, Director

Fire - Is This the New Leaky?.....................10BY JOSH RAWLINSON, Building Surveyor

COMMERCIAL PROPERTY

Flammable Cladding...................................13BY SEAN MARSHALL

Watch This Space - Auckland’s Unitary Plan is a game changer................................14BY RORY CROSBIE, Director

Long Term Maintenance Plans - it’s all in the detail........................................16BY LEON GOODWIN, Building Surveyor

BODY CORPORATE

Maintaining Buildings, Health and Safety Planning.........................20BY PHILIP O’SULLIVAN, Director

SPECIAL FEATURES

Introducing Respond-Architects...................22BY JODIE CAMERON, Marketing Manager

Cumberland House Case Study....................24BY JODIE CAMERON, Marketing Manager

Breaking Boundaries....................................26BY REBECCA WARD et al

Is It Already Bust?

FEATURE ARTICLE

“Boom” is the new headline on The Professionals sales signage and it aptly describes the dramatic 21% increase in values for the region that has taken Wellington by surprise.

The dramatic switch occurred in October last year when the Reserve Bank’s Loan to Value Ratio (LVR) rules changed. The effect was almost overnight as can be seen in the comparison graph below with Auckland inflation rates decreasing and Wellington increasing from that point.

The scramble for Wellington properties has seen big turnouts for open homes, large numbers of offers on properties, and very aggressive buying.

There seems to be some easing of this trend in recent weeks but the metrics still point to a strong market with above average numbers of sales, faster than average selling times and low levels of property listings available for sale.

We expect this to continue for a short time but Wellington will inevitably follow Auckland trends within 6 months, as the cause of the change is the same. Wellington does not have a shortage of 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

Estate Company) have also reported the least number of sales for 6 years.

Also we note a recent ASB property buyer confidence survey that suggests a majority of buyers are now thinking it is a bad time to invest. Add to this the recent increases to longer term mortgage interest rates, which will be an important influence as higher prices are supported by the low cost of borrowing.

This will be more noticeable when rates significantly increase. On a $400,000 mortgage, a 1% interest rate increase from 4.5% to 5.5%, on the same repayment amount means you can borrow $32,000 less.

The suddenness of the change in Wellington suggests it is an increase in investors and specula-tors rather than home owners looking for property.

BY MAX MEYERS, Registered Valuer, [email protected]

WELLINGTON’S BOOM

QV PRICE MOVEMENT | AUCKLAND v WELLINGTON

SOURCE QV - PREPARED BY MAX MEYERS

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FEATURE ARTICLE CONTINUED

The rental market is a more reliable gauge of a shortage of houses and rentals are increasing only modestly so far. Without doubt more houses are needed for a growing population, but demand has been unduly influenced by investors and speculators who have amped up prices forcing out those with real housing needs.

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 (no capital gain and very low rental returns), and the smart money will sell out to realise gains. This will be the correction phase, the first signs being less sales and slower selling times and reducing property inflation rates.

It will be some time before prices start to decline but by

hold off to avoid making a loss, the reverse of the buying quickly before prices go up. For Wellington, the volume, time to sell, and price increases indicate there is still an upside, but the reverse is indicated for Auckland.

With a huge increase in investment home supply is increasing quickly (particularly in Auckland, but also in 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 cycle.

Big increases in property values have occurred throughout the Wellington region, but effects vary between locations and types of property. Notable variations are:

Lifestyle properties with an average increase closer to 5%Rental properties having very high increases of 30% to 70%Vacant section sales having lower than average increase at an average of 14%Low value increases for older apartments - 10% to 20%Pre 1940 dwellings had average increases over 30%. Older ownership flats had slightly aboveaverage increases - 24% to 28%Low increases in: Eastbourne, Central Wellington, Pinehaven,Mana, Paekakarki, and Pukerua Bay. High increases in: Alicetown/Moera, MtVictoria, Porirua East/Ranui Heights, Taita,Waiwhetu/Fairfield/Waterloo.

The Auckland market has passed its peak in value increase in Oct 2015. The rate has been falling most of the year but the rate is still a healthy 13.8%. The number of sales peaked in March 2015 and numbers have fallen and are now consistently less that the same time in 2015. The time to sell is now at 33 days, consistently longer than in 2015, and trending up.

Wellington has had an average increase of 21% compared to 1.7% the same time last year.

The metrics for Wellington suggest the market remains strong with an above average number of sales, low stock and listing numbers, and well below average selling times at 26 days.

OPPORTUNITIES

High demand enables all types of property to sell and be recycled and this can be an ideal time to move on.

Properties are now, on average, worth noticeably more than in the previous peak in 2007 and those that have put plans of moving or downsizing will now find they have considerably more equity than at this time last year.

The average Wellington home is now $65,000 to $140,000 more than it was last year. Waiting to get the most out of the market is a natural inclination but when the market turns properties are more difficult to sell. So if you have thought about a change, this could be an opportune time.

New building has never looked so good. It’s the supply and availability of builders that is a constraint. Pricing is now more favourable compared to existing properties, and in many areas, older homes have gone up in price to a greater extent than new and near new homes.


“Current conditions provide an ideal

opportunity to sell particularly for the less

preferred types of property.”

TAURANGA

BY ROSS FORSYTH, Registered Valuer, [email protected]

Cooling for the summer?

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Price trends in Auckland & Tauranga

Auckland Tauranga Mount Maunganui/Papamoa New Zealand Excl. Auckland

Over this past year, residential real estate in Tauranga has seen a significant upli� in activity and values. A good degree of the activity is engendered by home purchasers and investors from Auckland in conjunction with a pent-up local market that has taken advantage of the life in the market to sell and move.

From December 2014 through to October 2016 the growth in property values accelerated. The graph below indicates the upward trend in values over this period and interestingly while not at the same value levels, the rate of growth for Tauranga City was greater than that of Auckland.

This market upturn was verified by selling agencies who all reported a near “frantic” market that saw sales prices surge ahead - with each new sale se�ing a new benchmark.This trend has been echoed by ‘the days on market’ for proper-ties, where this indicator of key market activity showed as the number of days on the market fell, values rose.

The latest statistics from Core Logic saw a year on year growth in value of 27% from October 2015 to October 2016,and an average sale price of $651,725.

However, recent signs are that perhaps the market has taken a downturn. Estate agents are reporting lower success rates at auction, some ‘disappointed vendors’ and a tendency for property having to go through a more conven-tional sales process, e.g. post auction conditional sales contracts.

It would seem that the measures introduced by the Reserve Bank in late July are having a dampening effect on market activity – not just in Tauranga – but across the nation.

It could be that purchasers are now more aware of a potential slowdown in activity with even the possibility of values falling,and are therefore being more wary of jumping into what has been a very ‘hot market’.

In addition, New Zealand is now coming to grips with the new American Presidency and the potential outcomes that might arise from some very unclear policy directions espoused during the election. The outcome of such policies (whether they come fully into effect or not!) are certainly weighing on the minds of decision makers.

It is quite possible that the costs of finance may well rise as a direct consequence of these unse�led times. Should this occur, it could impact significantly upon both vendors and purchasers, and indeed some of this current slow down may well be a�ributed to this uncertain picture going forward.

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 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. So�ly, so�ly could well be the mantra for the next 2-3 months!

PROPERTY UPDATE

BY ROSS FORSYTH, Registered [email protected]

SOURCE: REINZ

SOURCE: REINZ


THE PLACE DESIRED BY MANY?tooAuckland

The new loan to value ratio (LVR) restrictions imposed by the Reserve Bank requiring an investor have a 40% deposit to buy an investment property which were imposed in July this year have had an almost immediate effect in slowing market activity.

Sales volumes for properties sold in August, September and October are down to 2,300 per month from the average monthly volume seen over the past three ‘boom’ years of 3000 sales per month.

In past cycles, a figure of 3000 + sales /month in Auckland represents a booming market. Sales in the mid 2000 range reflect a ‘steady as she goes’ position, under 2000 is somewhat of a slump, and less than 1500 sales is a recession.

on the back of the LVR handbrake. Something similar happened at the end of 2015 when the Reserve Bank imposed their initial round of LVR restrictions requiring a 30% investor and 20% home buyer deposit. Activity then slowed for 3-4 months over Summer. But, come February 2016, the market took off again. hence the latest round of restrictions.

Most probably, the same thing will happen this time around. Come early 2017, market activity is expected to start ramping up again until the next possible round of Reserve Bank intervention requiring even greater investor and first home buyer deposits. This slowdown is likely to be tempo-rary. There are a number of reasons why there is no sign of a true, underlying slowdown:

Historically low interest rates are likely to stay low for some time. This ability for homeowners to service greater levels of debt has simply been transferred into larger mortgages 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.

The availablity of ‘cheap’ money from banks is behind much of the current price pressure.

Booming migration numbers of a net 70,000 gain in perma-nent long term arrivals. The soaring migration numbers put greater demand on housing as most migrants (60%) tend to

Migration flows to and from New Zealand are one of the major drivers of the housing cycle markets. Past booms in the mid 2000’s and 1990’s were directly linked to large net migration inflows. This boom has seen double the population growth of the past, but prices have only risen by 15% per annum.

A chronic housing shortage brought about by underbuild-ing of homes since the mid 2000’s. This has been exacer-bated by Auckland Council’s red tape around resource consent procedures plus restrictions on land supply for housing. (Refer also to the article ‘Watch this Space’ on page 14 for more information).

It is estimated that Auckland currently needs 40,000 dwellings - and this is increasing as the population grows. Consents are only tracking around 9,600 in the last year: about half of what is actually needed to meet population growth.

Even if consent numbers rise dramatically from this level, there will not be enough builders and tradespeople to build the homes we need.

Investors chasing income and capital yielding assets for their retirement. Property is an easily understood and managed investment class. While rental returns are now very low (2.5% - 4% range), the upside of capital gain (10%-20% per annum) far outweighs this. Risks of a decline are low, and even so, in past declines, prices have only fallen 10%.

Asian interest in NZ property is high, and likely to remain so. Most of that money ends up in Auckland property.

Auckland’s median house price hit a new record of

winter months. This slight weakness through winter reflected the new LVR rules and slow down of activity.

While the market takes a breather it is possibly a good time to buy without the frenetic hype and bidding wars that have been seen earlier this year.

sales activity as happened in early 2016. It will be interest-ing to see how the market reacts.

As 2017 will be an election year, the uncertainty stemming from this will hang over market sentiment later in the year and likely cause another slowdown in sales as occurred at the last election in 2014. An unfavourable result will cause

But Auckland’s pressing housing needs are not being met. With booming migration and a supply shortage, prices are likely to continue to rise even on lower sales numbers. The rate of growth is slowing which is a good thing. Short of an economic collapse, major international failure, or more serious earthquakes, real estate still looks like a very safe bet.

LVR Restrictions Hit Home...Top Auckland Valuer Gordon Edginton describes the impact of new Loan to Value Ratios on the Auckland Property Market.


Cracks are beginning to showREBUILD

THE CHRISTCHURCH

Over five years on from the magnitude 6.3 earthquake of the 22 February 2011, the Prendos Christchurch office continues to provide a range of specialist property consultancy advice to the region.

“The damage to property in Canterbury was substantial, and the total value of construction work to be complet-ed over the period of the rebuild is estimated to be about $40 billion. The Reserve Bank estimates that the rate of rebuild activity underway in Canter-bury is around 1.5 percent of potential GDP per annum, and that the rebuild will extend beyond 2020”. Christchurch Director Rory Crosbie states.

As predicted, rebuilding greater Christchurch has had a huge social, cultural and environmental impact on the local area and for the entire country. As one of the biggest economic undertakings in New Zealand’s history, the challenge of ensuring that the rebuild and repairs of damaged buildings are completed safely and correctly is huge.

Prendos consultants understand that to achieve safe, healthy, durable homes and buildings all building work must meet strict requirements.The building regulatory system sets out a framework to promote good building practice. However, many in the building and construction industry don’t fully understand this system which comprises:

The Building Act 2004: the primary legislation governing the building and construction industry;

The Building Code contained in schedule 1 of the Building Regulations 1992 which sets the minimumperformance standards buildings must meet; and

Building Regulations which detail particular building controls (for example, prescribed forms,list of specified systems, definitions of ‘change ofuse’ and ‘moderate earthquake’, levies, fees and infringements).

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.

The intention of the building regulatory system is to ensure that building work can be carried out more efficiently while maintaining quality. Our building performance based regulatory system requires consents, management and observation of the works and sign off to achieve code compliance.

Rory constantly reminds his Christchurch team of consultants to ask questions on the building control regime, not just of him, but of his senior colleagues across the company.

Given that 2016 has seen Canterbury’s busiest year ever for construction, the potential for ge�ing it wrong increases. Due to the sheer volume of activity across the greater Canterbury region, construction mistakes, both in design and implementation of the intended design have, and will continue, to be made.

The increase in the variety of materials from overseas also adds to potential future problems.

Currently, there is huge demand for Rory and his team to revisit completed repairs as a result of poor scope, design and workmanship.

“Inevitably, we are also ge�ing busier providing advice on ma�ers of dispute. At a recent mediation, represent-ing the claimant, a total of 26 people were present representing the various parties caught up in the dispute!”

“It was one of those things, a dispute caused by a defect resulting from all those involved working in a pressure cooker type environment created by the need to adapt to new construction techniques under tight timescales and tight budgets” Rory explains.

While the pent up activity is predicted to last until 2020, Rory believes it will stretch far beyond that date.

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.

Notify insurers of the event and that a claim will follow.

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 assessment in accordance with MBIE Building Performance guidance.

Make recommendations on whether the building is safe to re-occupy or whether further more detailed investigations are required.

Take urgent action to make building safe, secure, weather-tight and sanitary. A building surveyor can assist and manage this process.

Record any remedial work done and take photographs for future insurance claim purpose.

Get essential services, like toilets and water systems, repaired. Ideally use existing contractors who maintain the specified systems to complete this work.

Keep records of everything the repairer replaces (and keep a copy of the bill).

Hire a structural engineer, building surveyors and quantity surveyors to complete a fully detailed damage assessment and scope of repairs.

Use damage assessment information to determine the repair methodology and to prioritise repair works.

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SEISMIC shift

Wellington CBD post 7.5 magnitude quake | November 14 2016 | Image source: Fairfax Media

FOCUS | EARTHQUAKES

8.

FIRE IS THIS THE NEW LEAKY?


It has become apparent through weathertight-ness remediation projects on numerous multi-unit dwelling and apartment buildings, that there are systemic issues with Passive Fire Protection Systems within the building industry.

The extent of the defects uncovered to date is wide-ranging. Remediation of these defects is resulting in additional costs to unsuspecting building owners, in the form of significant costs for rectification of non-compliant installations and project delays caused.

As a result of this, it is therefore prudent to scrutinise an existing building before an alteration project commences to determine if there are any potential fire protection issues that could impact a proposed scope of works.

BUILDING ACT 2004

Alterations to existing buildings trigger section 112 of the Building Act, whereby a building consent authority (Council) must not grant a building consent for the alteration of an existing building, or part of an existing building, unless it is

comply, as nearly as is reasonably practicable, with the provisions of the Building Code that relate to means of escape from fire.

Compliance with section 112, in relation to means of escape from fire, typically used to constitute

alarms, escape routes and exits. The definition of ‘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.

WHAT IS PASSIVE FIRE PROTECTION?

Passive Fire Protection is an integral part of a building and is vital to both life safety and property protection. Passive Fire Protection contains a fire, or slows the spread of fire through the use of fire rated walls, floors, ceilings and fire stopping of penetrating items such as pipes, wires, ducts and electrical conduits etc.

It is essential to maintain and undertake remedial actions on defective Passive Fire Protection systems to ensure they can continue to provide their fire and smoke separation function within a building. If a system is found to be compromised or defective it should be remediated as soon as possible, as the fire safety of the building could potentially be reduced.

DESIGN SPECS + INSTALLATION

Passive Fire Protection systems must be correctly designed, specified and installed. Specification and installation is however being overlooked by designers and building officials that over-rely on fire-engineers and producer statements. Generic design, incorrect product specification, shortcomings with technical documentation, poor workmanship and inadequate inspections has potentially arrived at another systemic failure within the building industry.

BY JOSH RAWLINSON, Building Surveyor, [email protected]

THE NEW LEAKY?

FOCUS | FIRE

Design, specification and installation are not straightforward processes and a�ention to detail iscritical. 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 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 the type and size of the gap or penetration, and for the type of material and construction used in the fire separation. Poor understanding of this results in products being used beyond the scope of their tested parameters and in the formation of ‘ad-hoc systems’ that have not been subjected to the relevant standard fire tests. In multi-storey buildings this issue could involve hundreds of penetrations (e.g. collars, floor waste seals, 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

THIS IS NOT OKABOVE: an incorrectly installed fire collar. The collar should be fixed directly to the underside of the concrete floor slab.

BELOW: Example of a systemic issue where fire rated sealant not tested or certified for the construction type is used yet labelled as being installed in accordance with the relevant test standards.

>> CONTINUED


COMMERCIAL PROPERTY

In recent years there have been a number of fires that have spread beyond the original fire source via non compliant combustible aluminium composite panels (ACP) and other combustible materials. Of note the Lacrosse apartments in Melbourne and The Torch apartments and Sulafa Tower in Dubai. Whilst no loss of life, there was substantial property loss and repair costs.

These ‘cladding fires’ have sparked awareness with insurers underwriting such buildings as well as body corporates, property developers and people living in them.

The Melbourne fire took just 11 minutes for the flames to spread from a balcony on the eighth floor up to the 21st floor forcing the evacuation of 400 people.

Fortunately, we have not suffered a major building fire event as a result of non compliant combustible claddings. However, given the number of buildings incorporating ACP and other combustible claddings and the fact that there is a wide selection of both fire rated and non fire cladding materials and systems available in the market, this could be a potential problem in New Zealand.

Following the Melbourne fire, the Victorian Building Authority (VBA) published an Industry Alert highlight-ing the issue and clarifying building code compliance pathways. This document is of relevance because in

BY SEANBY SEANBY MARSHALL, SEAN MARSHALL, SEAN Director + Director + Director Chartered + Chartered + Building Chartered Building Chartered Surveyor, Building Surveyor, Building [email protected]

FLAMMABLE

New Zealand we use the same standards as Australia for fire rating and determining the combustibility of materials.

To date, MBIE has published a guide Reaction to fire performance of aluminium composite panels. This guide only considers ACP claddings and not other combustible materials that may be use in the construc-tion of the external walls of a building.

The NZ Building Code is clear in regards to the functional requirements of external walls and claddings in terms of fire performance. However, it is all too easy for consultants to provide performance specifications without actually specifying materials and building systems that demonstrate compliance.

Prior to specifying a cladding system, it is important for building designers and officials to understand the requirements of the building code and not necessarily rely on a fire engineers fire safety report which traditionally is a performance / design strategy as apposed to a construction specification.

Given the potential for cladding fires in New Zealand and the now apparent lack of understanding around passive fire design, Prendos is very cognisant of not only building weathertightness but also achieving through design and specification, compliant fire performance.

CLADDING

ABOVE | The Lacrosse Apartments Fire , Melbourne . Image Source: Owners Corporation Network


The Auckland Unitary plan is a game changer not just for Auckland but New Zealand as a whole.

Provided it is effectively implemented it will allow Auckland to accommodate its inevitable growth. For property investors (including managed funds) looking to acquire property, add value and then on-sell the benefits of the Unitary Plan, zoning changes have presented them with longer term development opportunities.

For example, light industrial property on the city fringes, close to good transport links, with a change of use from Business 4 Zoning to Business Mixed Use, could now be intensively developed to accommodate much needed multi-unit light commercial and residential development.

During the due diligence stage of site acquisitions, Prendos is assisting with ‘bulk and massing’ studies to show development opportunity along with condition reporting on existing building stock to provide full visibility on the existing condition.

Understanding the condition of buildings prior to purchase allows for a possible discount in purchase price. It also ensures that when purchased any urgent deferred mainte-

statutory regulations and lease clauses.

“Seasoned investors understand the value of obtaining good advice. They have a duty to their shareholders to maximize certainty and to maintain the holding income of their assets until such time as they are altered, refurbished or demolished for redevelopment. Obtaining a building survey report prior to purchase of a commercial property or prior to the redevelopment of a property, will ensure its existing condition is documented, and potential issues and recommendations for any necessary repairs or refurbish-ment costs are identified”.

Realising the value add with intensification of use on any given site comes with risks. Investors and developers try to identify and evaluate those risks through obtaining expert advice. 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.

To assist clients with the identification of development risk Prendos work with specialist external consultants to gather advice on a sites geotechnical, environmental and service infrastructure.

Once the zoning of a site has been changed the intensity of development of any given site could depend on the geotechnical suitability, risks associated with foundation options and groundwater effects. On brownfield sites completing an environmental investigation at due diligence stage is essential.

Reviewing the LIM and completing site walkovers to determine the site characteristic may allow conclusions to be made on the likelihood of elevated contaminate concentrations. Risks associated with fill material on brownfield sites where they will require characterising to determine the appropriate disposal management options also require consideration.

If the pre-purchase due diligence period is tight the purchaser is made aware that the consultant’s ability to obtain advice from local supply authorities to determine how possible limitations regarding electrical and hydraulic infrastructure will impact the future development, can be restricted.

Once all factors gathered during the technical due diligence of a potential investment opportunity are known Prendos cost consultants can assist with the preparation of development appraisals showing the potential future value of the proposal. They can also work with the investor, keen to protect future value, through offering advice on the investment required on the existing assets over their remaining life and the value of any lease make good liabilities associated with the property.

Growth always brings challenges and opportunities. While enormous long term value enhancement can be realised through intensive development, there will be those chasing such opportunities who will not seek the expert advice required to reduce the risk of their property decisions. As a result some will fail. Watch this space!

BY RORY CROSBIE, Director, [email protected]

this spaceWATCH

COMMERCIAL PROPERTY

The Auckland Unitary Plan is a game changernot just for Auckland, but New Zealand as a whole - Director Rory Crosbie explains.

MAINTENANCE PLANS It’s all in the detail...

LONG TERM

It is now just over five years since the Unit Titles Act 2010 came into force in New Zealand.

With the introduction of the Unit Titles Act 2010, it became mandatory for every unit title development in New Zealand

regardless of the size of the development. Due to the onerous nature of this new legislation, the government allowed a grace period for bodies corporate to arrange for the LTMP to be provided.

THE LEGAL PART

(1) A body corporate must establish and regularly maintain a long-term maintenance plan.(2) A long-term maintenance plan must cover a period of at least 10 years from the date of the plan or the last review of the plan.(3) The purpose of a long-term maintenance plan is to—(a) identify future maintenance requirements and estimate the costs involved; and(b) support the establishment and management of the funds; and(c) provide a basis for the levying of owners of principal units; and(d) provide ongoing guidance to the body corporate to assist it in making its annual maintenance decisions.

These are the minimum legal requirements for any LTMP for a unit title development to contain. As with most legislative wording, the requirements are broad and do not go into particular detail of how the plan should be presented and what particular data should be captured. The basis for calculating future maintenance is also not specified in the act.

COMMERCIAL PROPERTY

WHAT SHOULD BE IN THE PLAN?

The contents of a LTMP should include each building element that would be normally subject to maintenance during the life of the building and generally under the following headings:

The common property (e.g. common landings/lobbies, entrance foyers, grounds, pools). The building elements (e.g. roof, cladding, joinery).The infrastructure (e.g. plumbing, electrical, ventilation, emergency equipment, security etc.).

An important caveat to the above however is that the body corporate can opt out of maintaining any particular items that they choose by AGM/EGM but these items will need to be identified in the plan.

Each of the building elements recorded on site (preferably by an experienced chartered or registered building surveyor), are assessed for typical life cycle based on the current condition/maintenance regime and other on-site data (exposure, location, material used etc) and added to an inventory. This inventory then forms the basis for calculat-ing the LTMP.

It is also important to note that long term maintenance plans do not include maintenance items that are required on a more regular (once a year or greater) basis such as window

wash etc. These are specifically excluded from this legislation.

So, without the benefit of a crystal ball, how do you calculate when a particular building element will require maintenance or replacement?

NO CRYSTAL BALL?

There are a number of tools available for us to calculate the approximate maintenance or replacement period of a particular building element. The Royal Institution of Chartered Surveyors has produced a comprehensive guide to the life expectancy of building components that gathers data on a number of building elements based on the experience of building surveyors.

The guide was produced to provide ‘in the field’ data on life expectancy, rather than rely on laboratory testing data, and provides a life expectancy range based on environmental conditions, design, construction, quality of materials etc. This is assessed by carrying out a desk top study and on-site evaluation of the building.

Experienced surveyors carry out on-site analysis of each building element, recording its current condition, mainte-nance regime (or lack of), quality of construction and whether any defects exist that require more immediate

There are also other important considerations to make when reviewing a buildings maintenance requirements such as; does the particular building element comply with current legislation?, is it economic to replace the particular building element (even though it has not reached its life expectancy), is there more superior technology for a particular building element that would mean replacement is desirable (particu-larly with building services) etc

So now that you have assessed when a particular building element should be maintained or replaced, what else should be included in the plan?

Under section 116 (part 3), the plan should also estimate the costs involved in the maintenance of the building and assist the body corporate to establish a fund (although as in section 117 (1), the body corporate can, by special resolution decide not to set up a fund at all) and provide a basis for levying owners.

Replacement or maintenance costs for each building element are assessed using our own in house database of elemental rates compiled by our team of professional quantity surveyors. This is based on current market rates for each region and is regularly updated which is particularly important in the present ever-changing construction market. We then calculate average construction price inflation to our cost model to give an estimate of replacement cost at the time the particular building element is due to expire .

The most accurate cost data however is always to seek pricing from tendering contractors at the time the replace-ment/maintenance becomes due and pricing contained with the plan should be used as a guide only.

Once the costing exercise is complete, the plan also calculates an indicative levy total for each year for the body corporate to consider.

Section 117 of the act provides further details of the requirements of a fund:

(1) A body corporate must establish and maintain a long-term maintenance fund unless the body corporate, by special resolution, decides not to establish a long-term maintenance fund.(2) The fund may only be applied towards spending relating to the long-term maintenance plan.(3) The body corporate must, by special resolution, approve

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.


any amount to be spent on any one maintenance item if the amount exceeds the amount specified for that item in the long-term maintenance plan by more than 10%.

As described in section 117 above, there are restrictions on the use of the fund, and it cannot be used to fund anything other than what is included in the plan (ie, cannot be used to fund improvements or other work outside of the plan).

With older or more complex buildings, we would recommend reviewing the plan at shorter intervals to ensure accuracy of the replacement and cost data.

Are long term maintenance plans just for body corporates?Absolutely not. Of course it is only unit title developments that are subject to the unit titles act but the concept of long term maintenance planning is transferable to all types of built asset. We have been involved in providing plans for warehouse buildings, offices, aged care facilities, retail premises etc.

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.

Prendos was engaged to provide a LTMP for a bodycorporate of a prominent historic building on Wellington’swaterfront. The building is listed with heritage New Zealandand has been converted into apartments.

Having reviewed the building and building elements, itbecame obvious that although the buildings façade hadbeen well maintained, the key issue was that the currentroof condition and configuration was problematic and lifeexpired.

The body corporate had gone about a regime of reactiverepairs on the roof to address leaks that had been occurringover the years.

Following discussion with the body corporate, it was agreedthat the LTMP allowed within it not only the estimated costfor replacement of the failed roof coverings but also for thesimplification of the roof and replacement with a moredurable material, therefore extending the life of thereplacement roof further.

This decision making in producing the LTMP was welcomedby the body corporate and has greatly assisted with theirfuture project planning.

Long Term MaintenancePlan for an Historic BuildingWhen good roofs good roofs good go bad....

CASE STUDY

PHILIP O’SULLIVAN , Director + Registered Building Surveyor, Auckland.


BODY CORPORATE

From the moment the various parts of a building are brought together, an inevitable process of decline commences; only slowed by positive interventions we call repairs & maintenance.

When homes are coalesced together as unit title complexes, rules are necessary to influence and govern human behaviour.

Accordingly, the need for long term maintenance plans (LTMPs) is enshrined within the Unit Title Act. Some Bodies corporate (BCs) see this as quite sensible, planning and saving to help fund future maintenance, so those that enjoy the earlier low maintenance years help contribute to the deteriora-tion that is inevitably happening around them.

Others see it as an impost: another unwelcome expense, so they pay the least possible to get a

and then approach maintenance in the same manner, always choosing the least expense - no stitch in time for them. The lack of immediate consequences allows this behaviour to become the norm for many BCs. The downstream consequenc-es can be significant - the worst case I have seen demolition was the only realistic option.

Health & Safety law on the other hand is loaded with immediate and serious consequences. This is intended so as to influence all those who control decision making and thus outcomes. It has got

The simple task of inspecting roofs for example has now become much more complicated. Using drones has been suggested and can be useful for a 'look', but to determine the actual condition of a roof and whether and when it needs to be replaced, still needs to be done by close inspection. With long run metal this involves temporarily removing some roof sheets and examining the hidden areas under laps and flashings that are unwashed by rain and

thus more prone to corrosion. This requires scaffolding and thus considerable cost.

So we suggest it's time to get smart about maintenance and design as well, so buildings so can

The sad truth is that we in New Zealand have been remiss in both maintaining our buildings and in failing to design in safe access to do so. This has spawned an industry of abseilers which are satisfactory for simple tasks like cleaning, but not for more complex maintenance and repair tasks.

Even if the work can be done, how is it inspected in the first instance by the right people to specify what is required, and then to check that it has been done correctly.

‘Smart’ means considering access and inspection when carrying out other maintenance work. For example BCs should arrange a full roof inspection while scaffolding is in place to paint wall cladding. [An aside - painting metal roofs may make them look nice, but as the hidden laps etc fail first, it is

this for later roof replacement].

'Safety in design' means providing for safe access for inspection, maintenance and repair e.g. roof access and fall restraints. It could mean permanent edge protection or, for larger buildings, built-in building maintenance access rails and units.

Prendos has designed maintenance access rails into the remediation of the 12-storey Nautilus Apartments in Orewa. We recently included roof anchor points into the building remediation of a 5-level apartment building in Mt Eden.

Prendos provides LTMPs and we can include safe access planning if requested. We also provide asbestos inspection services - an asbestos register is a requirement for our not-so-new buildings.

BY PHILIP O’SULLIVAN, Director, [email protected]&MAINTAINING BUILDINGS HEALTH + SAFETY PLANNING

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.NZCOMMERCIAL COMMUNITY RESIDENTIAL

Rejuvination of a classic

PROJECTS

CUMBERLAND HOUSE

volcano amongst Devonport’s exclusiveheritage-zoned streets, Cumberland House,designed by Neil Simmons in the late 1980’s isan exciting example of enduring modernarchitecture.

When current owners Garth and VivienneCumberland bought the property in 2013, theycould see it required modification.

With an appreciation for its ultimate potential,they engaged Respond—Architects (formallyPrendos Architecture NZ Ltd) to provide thetechnical solutions to dampness and wateringress.

“Essentially the house was completelyfuture-proofed” said Respond—Architects Director, Natasha Cockerell. “There was not only the reclad – overa cavity installed at the same time – but also anew roof, double-glazing, solar power, screedsof flashings and upgrades to existing insulation.”

The Cumberlands are unashamedly woodenthusiasts (Garth having worked nearly 30years in forestry) so found it easy to make thesomewhat unusual choice of rusticated,band-sawn, vertical shiplap treated pinecladding.

Auckland Council was initially hesitant of thechosen cladding; stipulating that the pine wasto be oiled and stained in a heritage colour tofit in with neighbouring houses.

The Cumberlands wanted the house to blendwith Mangauika and to maintain its pristine

freshness over decades without re-oiling.They chose a turquoise-grey stain the colourof which was to match the lichen growing onthe exposed volcanic rock nearby. It is also very close to the colour of naturally weathering pine.

“When our forestry friends visit, few recognise the cladding for what it is.

Pine can be sustainably treated, dressed and coloured to outlast imported timbers and look equally exotic.”

“We removed 10 tonnes of plaster and lathand replaced it with seven cubic metres oftimber which represents 7 tonnes of carbonstored for 50 – 100 years.’

Leaky aluminium joinery was replaced withdouble-glazed cedar sashes in pine frames.

“In hindsight we wish we had used anotherNZ timber for the joinery. A locally growneucalypt or another conifer would have added to our delight at the successful NZ-wood orientated transformation of a masonry building”.

The overall result is a subtle but strikingtransformation of the property that is bothdurable and beautiful. For Garth and Vivienne,this is the best result possible.

EDITORS NOTE: Cumberland House is currently entered in two categories in the Resene Timber Awards, which are judged in early 2017. We will keep you posted!


SPECIAL FEATURE

Gender inequality in the workplace is a long accepted reality. There are additional challenges faced by women in employment, and we only have to look at recent media reports to realise this issue is very much still at the forefront of international employment relations.

In an industry commonly viewed as male-dominat-ed, Prendos is unusual. There are women at senior levels in both technical and management positions, and a number of women in other less traditional roles throughout the company.

Maree Stevenson, National HR Manager, believes this is a direct result of initiatives to genuinely employ the best person for the position, despite traditional stereotypes. It is her view that industry and company policies have a huge impact on the employment of women.

“Women in management and non-traditional industries, such as property and construction, tend to be outstanding in their field as they have most o�en had to prove they are be�er than their male counterparts to compete and survive. Women in non-management positions in these same industries are also o�en sought-a�er, but ‘drop out’ due to family reasons or changed circumstances. O�en companies will not have the structure in place to facilitate their return to work. This reduces the likelihood of women moving into management positions, and without strong leadership and support these existing pa�erns will not change.” Maree comments. It is a sentiment echoed by many of the women at Prendos.

It is clear, however, that a�itudes are evolving. This is evident in the experience of Marianne Moloney, IT Facilities Manager for Prendos who has been with the company for over 10 years. She comments: “I have seen enormous changes in the way women are viewed in the workplace while I have been here. Women have a far more positive experience now”.

It is Marianne’s view that company growth was a catalyst for change.

As the company has grown, Prendos moved away from more traditional Kiwi company values, where the women predominantly did secretarial and typing work and the management roles were predominantly held by the men in the office. The company has benefi�ed from a wide range of skilled employees and consultants - men and women from New Zealand and around the globe - all of whom have bought valuable knowledge and experience to the company. By recognising the benefits of diversity, Prendos has been able to accommodate and retain these skills and many women working for the company have since had families and returned to Prendos.

Prendos boasts two female directors in architec-ture and structural engineering, and the IT, CAD design and Quantity Surveying teams are also headed by mothers with young families and the Wellington Regional Office now has its first female manager, registered building surveyor, Hayley Parkes.

Women are moving up the career ladder within the company, and being supported in study and further education, all whilst recognising the importance of children and family life.

Gender inequality in the workplace has been experienced by many of the women at Prendos, however, as a�itudes evolve, the skills and experience they can offer are becoming more widely recognised and they are being given the confidence and flexibility to excel in their roles.

It is clear that Prendos is making significant inroads by breaking down the stereotypes and traditional barriers to these non-traditional industries and roles.

BY SACHA HARWOOD et al.

BREAKING BOUNDARIES

HAYLEY PARKES, Wellington Regional Manager + Registered Building Surveyor.

SPECIAL FEATURE

Gender inequality in the workplace is a long accepted reality. There are additional challenges faced by women in employment, and we only have to look at recent media reports to realise this issue is very much still at the forefront of international employment relations.

In an industry commonly viewed as male-dominat-ed, Prendos is unusual. There are women at senior levels in both technical and management positions, and a number of women in other less traditional roles throughout the company.

Maree Stevenson, National HR Manager, believes this is a direct result of initiatives to genuinely employ the best person for the position, despite traditional stereotypes. It is her view that industry and company policies have a huge impact on the employment of women.

“Women in management and non-traditional industries, such as property and construction, tend to be outstanding in their field as they have most

counterparts to compete and survive. Women in non-management positions in these same

due to family reasons or changed circumstances.

to facilitate their return to work. This reduces the likelihood of women moving into management positions, and without strong leadership and

Maree comments. It is a sentiment echoed by many of the women at Prendos.

is evident in the experience of Marianne Moloney, IT Facilities Manager for Prendos who has been with the company for over 10 years. She comments: “I have seen enormous changes in the way women are viewed in the workplace while I have been here. Women have a far more positive experience now”.

It is Marianne’s view that company growth was a catalyst for change.

As the company has grown, Prendos moved away from more traditional Kiwi company values, where the women predominantly did secretarial and typing work and the management roles were predominantly held by the men in the office. The

skilled employees and consultants - men and women from New Zealand and around the globe - all of whom have bought valuable knowledge and experience to the company. By recognising the benefits of diversity, Prendos has been able to accommodate and retain these skills and many women working for the company have since had families and returned to Prendos.

Prendos boasts two female directors in architec-ture and structural engineering, and the IT, CAD design and Quantity Surveying teams are also headed by mothers with young families and the Wellington Regional Office now has its first female manager, registered building surveyor, Hayley Parkes.

Women are moving up the career ladder within the company, and being supported in study and further education, all whilst recognising the importance of children and family life.

Gender inequality in the workplace has been experienced 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.

It is clear that Prendos is making significant inroads by breaking down the stereotypes and traditional barriers to these non-traditional industries and roles.

BY REBECCA WARD et al.

BREAKING BOUNDARIES

THANK YOU FOR YOUR SUPPORT

WELLINGTON

Level 7, BERL House, 108 The Terrace

PO Box 10 278, The Terrace, WGTN 6142

Phone: (04) 931 7070

Fax: (04) 931 7072

CHRISTCHURCH6/35 Sir William Pickering Drive, Burnside

PO Box 8049 Riccarton , CHCH 8440

Phone: (03) 341 7570

Fax: (03) 341 7572

TAURANGALevel 2, 41 The Strand, Tauranga

PO Box 15218, Tauranga, 3144

Phone: (07) 927 7070

Fax: (07) 927 0760

AUCKLAND

34 Barrys Point Road, Takapuna

PO Box 33-700, Takapuna, AKL 0740

Phone: (09) 970 7070

Fax: (09) 970 7072

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.

Chris Ross and Hayley Parkes, Registered Building Surveyors, Prendos Wellington.

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