Final report into the Opal Tower released, impact on the property industry revealed

On Friday, the NSW Department of Planning released their final report into the Opal Tower, identifying the cause of structural damage, how the damage can be repaired and how to avoid this from happening again.

What was the cause of the damage?

Following on from the initial findings detailed in the interim report, various hob beams were found to be under-designed by the National Construction Code’s (NCC) standards, which resulted in failure by shear compression and bursting.

The hob beams were also only grouted partially, which also raised stress levels.

How can it be fixed?

In order to address the issues of the hob beams, the report said that ‘significant’ rectification works need to take place in order to make sure the Opal Tower and its structural components are up to the NCC’s standards.

The report recommended that an analysis needs to take place to determine a potential redistribution of load away from damaged areas to make sure no further damage happens.

“A preliminary analysis has been carried out and indicated structural loads satisfied the NCC in the non-damaged parts of the building structure,” the report noted.

“Nevertheless, this finding should be robustly and independently verified.”

Another recommendation was to bring in independent structural engineers to check and certify the rectification as being safe for tenants to return to, but the report mentions re-occupation should only occur after all the recommendations take place.

How can this be prevented from happening again?

The report recommended a number of databases and checks be implemented in order to guarantee the structural integrity of buildings:

• The creation of a database of government-registered engineers, developed jointly by a professional body;
• The creation of a database of all certifications that can be viewed by a wide range of stakeholders, including owners and prospective owners, which can be accessed before, during and after construction to increase transparency;
• Checking and certification by an independent third-party registered engineer of engineering designs and any additional changes to critical components;
• On-site checking and certification during the critical stage of constructions by a registered engineer that construction is being followed to the plan; and
• Forming a building structure review board to investigate structural damage in buildings due to design and construction faults and recommend changes.

What does this mean for investors and the property industry?

Regardless of the rectification work that takes place, Peter Koulizos, chairman of the Property Investment Professionals of Australia, said to Smart Property Investment investors that they will be unable to ever recover from this.

“From a property investor's perspective, unfortunately the value of the property will probably drop significantly, even if it is rectified and it gets a clean bill of health,” he said.

“That’s right, and I feel very sorry for the people that bought in and/or are living in ... because even if the building is rectified to 110 per cent of what it should be, most people would just remember how ... the place that has building defects.

“Poor old property [investors] or owner occupier can’t claim loss of value from that asset from anyone. Loss of rent, well, maybe if they had landlord’s insurance, they would have an opportunity to do that, but it’s unfortunate, very unfortunate.”

However, the change that introduced databases, especially the database to check certification, was a good idea in Mr Koulizos’ eyes.

“The better informed consumers are, the better decision they can make, so provided there’s no confidential information like there’s exactly... it tells you how much it costs to build and things like that, but if it’s looking for a certificate, which is what certification refers to, then that should be fine,” he said.

The Association of Accredited Certifiers welcomed the findings of the report, with CEO Jill Brookfield claiming initial attention was placed unfairly on accredited certifiers of the Opal Tower, which the report went on to absolve of guilt.

“This report vindicates accredited certifiers and highlights a clear lack of understanding about the certification process from a number of commentators,” Ms Brookfield said.

“Days after the issues with Opal Tower were first discovered, all accredited certifiers were unjustifiably attacked, undermining owners’ confidence in the role accredited certifiers play in the industry.

“Those attacks were clearly ill-informed and led to an avalanche of unjustified negative publicity for hardworking accredited certifiers doing the right thing around NSW.”

Certifiers such as like Adam Mainey, director of private certification firm Concise Certification, were also welcoming of the recommendations in the report.

“As certifiers, we think that the enforcement of the recommendations are a great step in improving building quality and safety in NSW,” Mr Mainey said to Smart Property Investment.

However, he did say it was disappointing that the outcome of the Opal Tower was the catalyst to push these changes through, when changes like these have been lobbied by certifiers to the government for years.

“The imposition of these changes will mean that everyone has skin in the game and will result in everyone operating in the [community’s] best interest rather than shortcuts being taken for profit,” he said.

The release of the report follows the AAC’s eight point plan to address accountability in construction, which is:
1. Anyone designing, installing and approving must be accredited and insured;
2. Anyone important involved in the process who isn’t accredited must be licensed and be able to prove their licensing;
3. Certification documents should be standardised in a format decided by both the industry and the government;
4. Anyone involved in the certification of engineering design or technical aspects of construction need to supply a certificate;
5. All licensed persons should be comprehensively audited;
6. All parties involved in the building product supply chain need to be accountable for the quality of products used;
7. Change the BASIX scheme to allow for predetermined standards for building designs; and
8. Bring building regulation and control functions to one portfolio, reporting to a single minister.

For more information on how the Opal Tower was approved, Mr Mainey explained how the process may have occurred previously.