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Short cuts in property development

Paul Keane
Auckland Property Development

Last Friday night saw the celebrations of the National Property Council Awards. The event is the mainstream event on the Property Calendar and this year attracted 1600 guests at the Spark Arena in Auckland to witness who the various winners were in the various categories. This event attracts all people who are associated with the Property Industry. It was a "sea of black" dominated by male attendees all in Penguin Suits. Trying to network is always extremely difficult given the number of attendees, the colour of the suits and the dim lighting in the room that tends to restrict viewing and identifying other people to just a couple of metres!! However that is not the subject of this weeks NIB.

"The major topic of discussion on Friday night was the fire that destroyed the Apartment Building in central London last week."

Certainly, it had people reflecting on their own properties and "could it happen here". For me it focussed my attention on the need during the design stage of buildings that careful and considered care and attention is given to finishes in buildings, and of course escape routes, and sprinkler systems. Over the years I have experienced Developers taking short cuts to assist funding in Property Development. These shortcuts are financially driven and naturally improve the return on investment. Traditionally in a few years following completion, the products used deteriorate and the result is shabby looking buildings that may leak.

However, in New Zealand, we have robust fire controls and product used must have a fire rating that is controlled under a code requirement. It seems from discussion emerging relative to the London tragedy, that the external product was not fire rated, hence the speed in which the fire spread.

Todays discussion however, is not just about fire rating product, but rather the intension given to the specification of a building at the preliminary design stage. I recall a couple of years ago, I was developing a stand beside a swimming pool for an Auckland College. The structural engineer designed the stand to take 300 children/teenagers. I suggested he double the rating due to the fact that "kids" never read instructions and 300 people could quickly grow to 600. The weight capacity therefore would throw tremendous strain on the lighter facility. Further, those of us involved could sleep better in the knowledge that we had considered all the future risks.

That's really my point this week. Whilst we have code control in this country, we need to ensure that we design for all eventualities.

"Have you ever considered the weight in the lift when you are in there with 16 other people and the internal sign says, maximum 12"

I also reflected on my visit this year to the Iguassu Falls in South America, where I stood on a foot bridge over the falls that had massive columns strong enough to sustain 14000 cubic metres of water pressure a second. Is that sustainable over time? I doubt it.

The message therefore is clear for those of us in the Property or related industries.

"Prepare and plan for the Worst" and protect those that will use the facility in the future.

Sharewatch | Ryman Healthcare

Ryman Healthcare has been so successful for so long that it can be hard to pick out new detail from their NZX reporting. But here are some of the highlights.

Ryman target a 20%-25% development margin on their villages, and have maintained or exceeded this level for at least the last six years. In the year to March 2017, they came in at 24%. These margins are delivered by Ryman’s in-house control of the development process, including consenting, design and construction.

The company has a pipeline of villages being built or planned around New Zealand, even in Auckland where construction capacity issues are starting to bite. Villages in Pukekohe and Birkenhead are almost complete, Greenlane is underway, Tropicana and Devonport have just been consented, and Ryman have also just announced the purchase of a site in Henderson.

Ryman have been expanding into Melbourne, with six villages now underway, and seem to be off to a very good start there. They’re delivering ‘independent’ apartments slightly cheaper than in Auckland, and ‘serviced’ apartments at about the same price – but typical house prices in Melbourne are significantly higher than those in Auckland, so the financial equation for residents to move out of their house and into a village is even better.

As for the more usual reporting measures, Ryman have grown profits, cashflows and dividends in 2017, as they have done for many years.

Ryman Healthcare

In the Press

Local media highlights 12 June - 19 June 2017

 

Auckland Mayor Phil Goff calls for the introduction of a building warranty

Auckland Mayor Phil Goff is making another call for central government to take the lead on enabling houses to be built more quickly in the super city.

(Source: Interest)

 

Queenstown property market peaking - infrastructure problems clear

Queenstown's property boom has cast a spotlight on major infrastructure deficiencies, according to a new property market report.

(Source: Stuff)

 

Cosmetic retailers add to the make-up of commercial property sector

International cosmetic retailers are making their mark on New Zealand's commercial property sector.  And property owners and operators are licking their lips at the thought of increasingly tapping into the market.

(Source: Stuff)

 

Fonterra ups the ante in Australia with higher milk price

Fonterra has upped the ante in Australia by offering one of the highest milk prices of all the Aussie processors and widening the gap between the price offered by itself and the biggest player.

(Source: NZ Herald)

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