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Digital Building Records Could Bolster Valuations

Digital Building

An industry-wide shift to digital construction records could hold the key to rebuilding the credibility lost amid the cladding catastrophe, high-profile pundits suggest.

The limitations of paper construction records have been further illuminated during the cladding crisis, with authorities left scrambling to determine which major buildings across the country posed a flammable risk.

A big part of the problem was the fact that records were paper-based, and stored by various stakeholders, rather than in one central place.

Tracking down the manufacturer, installer and developer for each project has been a nightmare for authorities, who are still scrambling to assess more than 3400 residential apartment buildings constructed with cladding that have been deemed flammable.

The shift away from paper would ensure project managers store the hundreds of pieces of information such as design plans, costings, construction and supplier details, manufacturer details, approvals and the rest all in one spot.

Tech shift improves ‘trustworthiness’ of buildings

Now, key industry players are throwing money behind digitalisation projects that would allow developers to have true project visibility. They believe that this could provide certainty to developers and help rebuild the credibility crisis damaged by the cladding catastrophe.

Big four accounting firm KPMG has committed to creating the first working model of the Building Assurance Solution within six months under a NSW Building Commissioner contract won by a consortium of KPMG, Microsoft and Mirvac, ASX and the Western University Sydney. It will be piloted on cladding rectification projects.

The building assurance solution will use several advanced technologies, like blockchain, to store detailed records throughout the development and construction process, including materials and methods used, certifications achieved and contractor details. One of the other key players already in this market is Aconex, which offers a product for the construction sector.

NSW minister Kevin Anderson says the goal is to drive transparency and lift standards in the construction sector.

The building assurance tool will allow the regulator to easily identify and respond to defective products and take action against the riskiest practitioners by knowing which buildings they have worked on.

“This [work] will help measure the quality and insurability of buildings by identifying which buildings are trustworthy, from measuring compliance with design and construction standards to traceability of materials all the way back to the manufacturer,” Anderson says.

“This will show us what products were used, who made them, what testing certifications are held, and who installed and certified the building work. Practitioners who build and design in NSW will now have a digital fingerprint that will attach to every project they have worked on.”

The government intends to reach out to other jurisdictions to collaborate on the project.

Digital Building

▲ The polyethylene-core panels used at Lacrosse in Melbourne allowed a fire to race up 13 levels of the 21-storey building in 10 minutes in November 2014. 

Laszlo Peter, KPMG Partner and head of blockchain for Asia told The Urban Developer that digital records can unlock the full traceability of a development.

“Every building now contains material from many markets around the world. This system is designed to be a multi-jurisdictional solution to meet today’s global supply chain ecosystem.

“Digital records can provide a digital footprint that will improve the trustworthy rating of a building.”

Future applications could include a carbon registry based on embodied and operational carbon accounting, or commercialising supply chain data, Peter says. Digital records will also enable consumers to better understand the environmental impact of a building, raising the value of an asset.

Digitising the development lifecycle

How far away the tipping point of paper to digital will be will vary significantly by record type, according to Mirvac’s chief digital officer, William Payne.

“Adoption will always be the key challenge. People must want to use these different new approaches, and that comes from clever design that makes the experience better, or in some cases—for example with digital native consumers—more familiar,” he says.

Payne suggests that legislative changes could kickstart the shift, both in terms of accepting new forms of digital record over paper, as well as help support the wider adoption agenda.

“The more depth and accessibility of information across the entire lifecycle of a building can only serve to improve understanding and awareness of an asset, both in terms of how it was created and how it operates,” he says.

Digital Building

▲ State governments are now attempting to digitise and link planning, strata, construction, conveyancing and associated regulatory systems. 

Developers could learn a lot from what’s been happening in the commercial setting for years, points out the head of construction project management platform InEight, Rob Bryant.

Bryant says digital data records save time on surveying to create, rather than validate.

“Digital records can provide an immediately available auditable record of materials used—in the event of future changes to standards, recalls or safety concerns—which can add significant value and save time,” Bryant says.

Asset valuations

However, whether digital records could raise the asset value on an open market is questionable, others say.

Sydney property developer Mila Mikhaleva isn’t convinced the shift to digital records will add value.

“Currently, we put disclaimers in our report stating that the lender should sign asbestos reports, cladding, etc, before making a decision. However, it would definitely help us and other professionals dealing with the building in obtaining more accurate information.”

When working in Russia, valuers regularly referred to a document known as a “building passport”—centralising the details of a property in one place, which was useful, Mila says.

CEO and co-founder of proptech industry leader Archistar Benjamin Coorey says paper-based records are inefficient, create delays and add cost to the process.

Despite being a digital advocate, he’s not convinced the shift will equate to higher asset valuations.

“I don’t anticipate that digital records would make the valuation higher or lower, but digital records can improve the valuation process, as it allows for faster decision-making and easier access to information to make decisions from,” he says.

However, Kevin Brogan, director of group risk and compliance at Herron Todd White says anything that gives buyers more certainty over the history of a building is beneficial.

“As construction costs increase, there is the potential for materials substitution to occur, and so a register that can provide a confirmation of materials provenance and compliance with appropriate standards will be valuable. Some combustible cladding materials were found to be cheaper substitutes for the specified cladding, for example,” Brogan says.

A market response from insurers is yet to be seen, but better transparency could result in better products in the future.

 

Article Source: www.theurbandeveloper.com

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Commercial

Three out of four mortgage holders who asked for a rate cut, got one: RateCity

mortgage

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market

Almost three-quarters of variable borrowers who asked for a rate cut, got one, a new survey has found.

In a RateCity.com.au survey of over 1,000 mortgage holders, of those on a variable rate, 52 per cent haggled with their bank for a lower rate. Over 73 per cent of these people were successful in getting at least one rate cut.

A rate reduction of 0.25 per cent could save the average mortgage holder $1,241 in interest after one year and $3,656 after three years. This is based on a $500,000 loan balance with 25 years remaining.

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market.

mortgage

Omnia 4-6 Horscroft Place, Moorabbin VIC 3189 

RateCity.com.au home loan database analysis:

  • 49 lenders have cut at least one variable rate in the past two months.
  • 10 lenders have hiked variable rates in that time.
  • The vast majority of variable rate cuts are reserved for new customers, not existing ones.

RateCity research director, Sally Tindall, said while the RBA is not expected to move the cash rate tomorrow, one phone call could potentially save the average variable rate mortgage holder thousands.

“Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,” she said.

“A lot of people think a handful of basis points won’t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years.”

 

Article Source: www.urban.com.au

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Brisbane

Mirvac Picks Up Rejected Brunswick Site

Mirvac

Mirvac has snapped up the site of a rejected mixed-use development from JWLand with plans to expand its residential pipeline in inner Melbourne.

The 6496sq m site overlooking Princes Park includes an old hotel and several dilapidated buildings at 699 Park Street, Brunswick with frontages on Sydney and Brunswick roads.

The ASX-listed property group has yet to disclose the purchase price, and would not confirm reports they had paid about $40 million for the site.

JWLand acquired the site for $30 million and planned to commence construction on the site in late 2017.

But those plans were rejected by the Victorian Civil and Administrative Tribunal, including the demolition of a heritage building to construct 255 apartments, retail space and a child care centre.

Mirvac

▲ The plans for JWLand were rejected by VCAT included multiple buildings along Park Road, Brunswick. 

Mirvac already has plans to build around 200 apartments on the site.

Mirvac head of residential Stuart Penklis said the development would enhance and celebrate the location, as well as being sensitive to the surrounding properties and amenity.

“The current plans see the building at various heights stepping back from Park Street to minimise any impact on Princes Park and maximising the spectacular vistas for residents, but we are still in the process of finalising the scheme,” Penklis said.

“Mirvac is in the early visioning stage for Park Street, with the current scheme looking to yield approximately 200 apartment residences in a range of configurations to appeal to a broad selection of purchasers.

“We have recently seen a trend towards oversized apartments and amalgamations which could see this number change.”

Mirvac plans to launch Park Street in mid-2022, with construction anticipated to commence in late 2022.

Park Street joins Mirvac’s $1.4-billion Victorian apartment portfolio that includes Phoenix, Folia, and Forme in Doncaster; The Eastbourne in East Melbourne; and Yarra’s Edge in Melbourne citywhere planning for tower nine is under way.

 

Article Source: www.theurbandeveloper.com

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Brisbane

Brisbane running out of land for new homes, with less than 3 years’ supply

new homes

Brisbane will run out of available land to build new homes in less than three years – and Noosa has just one year – as a housing crisis grips the state.

The startling projection was revealed via documents released as part of Queensland budget estimates hearings, but Deputy Premier Steven Miles argued that almost 50,000 residential lots were in the process of being unlocked in south-east Queensland following the October 2020 state election.

Under state government rules, all local government areas should have four years’ worth of approved lots – land that is ready to go to market.

But Brisbane has just 2.9 years of approved lot supply, Noosa has 1.1 years, the Gold and Sunshine coasts 1.9 years each, Redland 2.9 years, and Moreton Bay 3.2 years.

But Mr Miles said almost 50,000 residential lots were in the process of being unlocked following the 2020 state election.

“Our strong health response to the COVID-19 pandemic has created a spike in interstate migration which has put pressure on land supply across the state,” he said.

“While COVID has certainly spurred an increase in interstate migration, we would expect to see further increases over the coming years in the lead-up to the 2032 Olympic and Paralympic Games.”

Mr Miles said the majority of the state’s councils had up to 30 years of lot supplies.

In other areas, Bundaberg has 14.9 years, Cairns eight, Gympie 9.6, Ipswich 7.3, Rockhampton 16.2, and Toowoomba 6.1.

Some areas have extremely high rates, with Banana reporting 354 years of supply, Gladstone almost 249 years, and Isaac 363.

Mr Miles said in response to population growth linked to people moving to Queensland from interstate – a boom in new residents not experienced in almost two decades – he established the Growth Areas Team in March 2021.

“The GAT focuses on land supply in south-east Queensland to ensure we can keep up with expected population growth, and the demand for housing and infrastructure development that comes with it,” he said.

Mr Miles said the government had identified Caboolture West as a pilot site for a future growth area program providing 3000 extra homes, while it had also provided $15 million for a wastewater treatment plant to pave the way for up to 5000 extra homes in Southern Redland Bay.

The years of supply are calculated based on uncompleted lot approval and lot certification data prepared by the Queensland Government Statistician’s Office using information provided by councils.

The latest figures come as there are 47,036 people on the state’s social housing register – a 70 per cent increase in just three years – and as rental vacancy rates hit 10-year lows and property prices soar.

According to a report released last year, south-east Queensland needs an extra 31,979 dwellings each year to keep up with demand.

LNP housing spokesman Tim Mander said more land needed to be made available.

“And we need to build the roads, water and sewerage to support it,” he said.

“We must build the infrastructure that protects the lifestyle of the people who live here and that gives opportunities for our kids to get into the market.”

 

Article Source: www.brisbanetimes.com.au

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