Building standards a not being followed, and a major incident is ‘inevitable’. Here’s hoping nobody dies.
I’m a property bull…full stop.
Currently I’ve got about $8 – $10 million of townhouse development in the pipeline… 2 and 3 bedroom townhouses in a blue-chip Melbourne area.
But here’s a property style that I’ll NEVER buy… and I’m constantly warning you to stay well clear of. It’s the 1-bedroom / 1-bathroom chicken coop.
A few weeks ago I wrote about how dodgy building practices were responsible for the fire that tore up the Lacrosse Building in Melbourne.
Turns out the cheap cladding that was used – which was not up to Australian standards – was highly flammable.
Not what you want from apartment cladding.
From there, one cigarette left unattended on a balcony caused a major fire. It tore up the cladding and jumped 13 floors in 13 minutes.
Luckily, no one was killed.
The problem seems to be that new buildings, especially ones being built by off-shore developers, are not following the codes they’re supposed to. A drive to lower costs and boost profits has meant that developers have gone for the cheaper, weaker, more flammable material options.
The codes are in place, but they’re not being monitored or enforced.
A now a report from Engineers Australia says that 85% of strata units in NSW were defective upon completion.
That’s not a handful of rouge operators. That’s almost every unit building in the state!
They’re conclusion is that “the building system in New South Wales has broken down”.
They also reckon that a major fire in a high-rise Sydney apartment is “inevitable.”
Let’s hope it’s not home to someone you love.
But everyone is loved by someone, so let’s hope it never happens at all. But it’s not looking good.
It’s scary stuff.
And one of the report's authors, engineer Robert Hart, said the situation was only going to get worse.
“There are something like 20,000 new units coming on stream over the next few years, and we know they are being done by developers who are totally inexperienced and [have] no real interest in anything other than making money and this is causing major concerns.”
“There is a raft of issues. It is occurring daily but no-one is inspecting this stuff.
“This is what is going to cause a major incident at some point.
“There are some very clever fire engineers in this city and they have the most appalling stories.”
He said the major problems are
- Fire separation between apartments;
- Almost no fire gaps installed correctly;
- Fire dampers that prevent the spread of smoke are very seldom installed correctly;
- Electrical installations not properly done.
The Master Builders Association has agreed there are pockets of the industry that had problems.
(Can 85% of a market be a ‘pocket’?)
But MBA executive director Brian Seidler said that it’s not just about developers. Architects also made mistakes and clients made requests that did not comply with all building codes.
“Australia is being inundated with non-conforming products from countries where they don't have any standards yet clients specify that they be put in place.”
But this is exactly the kind of soil where tragedies thrive. No one knows what’s going on, and no one’s policing the rules.
It’s a recipe for disaster.
In Australia, we still don’t have an apartment mentality. We’re still living in the detached quarter acre block 60s.
But from here on, it’s all going to be about apartments. Last year we built more apartments than houses for the first time ever. There’s no going back now.
We need to get used to that reality.
And we can’t say that we didn’t see it coming.
We’ve been driving ‘urban consolidation’ for decades. Our planning policies try to limit urban sprawl and encourage higher densities closer in.
And nothing builds density like apartment towers.
And so the planning framework was there.
And for a long time, progress was slow. Australian developers maybe just didn’t believe that Aussies wanted to live in apartment towers.
But Asian developers didn’t have such a cultural cringe about apartment living.
And they looked at the economics of our housing market. Massive population growth projected over the coming decades. An existing shortage of housing. Land on a drip-feed supply. Planning policies promoting high-rise.
The only way is up. Literally. The only realistic vision for our cities was to grow up – into higher and higher towers.
This is the reality for ‘international’ cities. Sydney and Melbourne can’t escape that. And neither can Brisbane or Perth… The other cities have a little longer to prepare.
But it caught us napping. Australian developers were used to playing by the rules. They definately didn’t want an incident like a major fire on their hands.
But the market changed. Suddenly there was a rush of new developers.
But if there’s a fire in a building from a Malaysian developer, how are we going to hold them to account? They’ll just fold up the paper company they had in place in Australia, and disappear.
If there’s a major incident, Australia will be left footing the bill for compensation. Australia will be left to console the victims’ families.
And right now, if I were an investor in one of these apartments, I’d be pretty nervous.
The Engineers Australia report noted that NSW insurance companies reported repair costs of an additional 27% over other states.
It won’t be long til insurance companies wise up to this. Soon, there’ll be premiums for apartment buildings just so they can protect themselves.
And maybe they just won’t pay claims where it can be easily proved that codes weren’t followed?
And if there is a major incident, what’s going to happen to the rental market. Even the best real-estate agents will have trouble marketing that one.
‘Well appointed unit in widely known death-trap for rent. All offers considered.’
There’s nothing to love about this story. Developers are walking away with the money. Investors are left holding the baby, and worst of all, lives are genuinely at risk.
The government needs to get on top of this one fast.
How do we fix this mess?
Would you invest in apartment towers?