Over the past 10 years the New Zealand property industry has overtaken manufacturing to become the country’s largest industry, at 13% of GDP. It contributed $29.8 billion to the New Zealand economy in the 2015-16 financial year and employs one in every 12 people in areas from construction and property to real estate, architectural and engineering services.
Our nation’s ‘built environment’ (the human-made spaces in which people live, work and play) is an essential part of our lives. It’s worth approximately $495 billion to the economy: $400 in residential and $95 in commercial, of which just under $20 billion is government owned. New Zealand Property as an asset class exceeds the value of stocks and shares and, as Crosbie explains, predictions are that its value is likely to remain strong.
“Demand for property in New Zealand is continuing to rise. Our population has grown from 4 million in 2006 to 4.693 million in 2016, and net immigration in 2017 was more than 70,000 people. To ensure these extra people are housed and the economy continues to grow, the industry needs to keep building more properties to match economic demand. This includes commercial properties, which not only provide working environments for the increased population but – in the case of ‘mixed use’ assets – living spaces too.”
Like all assets, commercial property requires careful management through all stages of its life cycle, and regular monitoring to ensure it continues to support the operational needs of the user.
Overseas, Governments are leading the way towards fully fledged digitalisation of asset management, including the maintenance of properties using Building Information Modelling (BIM). BIM is a life cycle model that uses digital representations of a place’s physical and functional characteristics. Karolinska University Hospital in Sweden leveraged this model to optimise the construction, handover, operation and maintenance of the largest ever public/private hospital – with 12,000 rooms and an overall investment of more than $3 billion.
However for private sector owners of commercial property in New Zealand, diligent asset management is an absolute requirement. From listed funds with property portfolios of over $1 billion to those with smaller portfolios, all property owners have a responsibility to their occupiers (and other stakeholders such as shareholders, investors, insurers and the public) to run a thorough asset and maintenance planning regime.
“Keeping buildings functioning in a planned preventative way is a given for occupiers of our built environment. It’s equally important for property owners, as maintaining their assets will ensure a favorable return on their investment.”
“In this era of disruption, occupier’s demands and priorities vary greatly. For some, data, connectivity and ‘the internet of things’ are vital for their business to function and keep up with competitors. For others, such as private hospitals, sustainability and resilience recovery are key. But regardless of where their priorities lie, keeping buildings functioning in a planned preventative way is a given for occupiers of our built environment. And it’s equally important for the property owners themselves, as maintaining their assets will ensure a favorable return on their investment.”
So, what’s the best approach for private commercial property owners? How can they ensure their buildings continue to function in a way that meets the needs of their occupiers and sees the best return on their investment? As Crosbie explains, that’s where Prendos Registered and Chartered Building Surveyors come in. “Prendos Building Surveyors specialise in planning the maintenance of property assets. We’re trained to diagnose a building’s condition, determine future potential expenditure levels, identify non-compliant statutory issues and pinpoint what immediate actions are required to maintain operational fluidity. All of this helps the asset manager maintain the integrity of their property and, given the growing level of the nation’s property stock, helps keep the economy ticking along!”
Maintenance planning should ideally form part of an asset management model. It includes everything from planned or routine maintenance to reactive or preventative maintenance.
“The key to understanding how an asset should be maintained is to first establish a property’s base line condition using what’s called a ‘condition audit’. Use, location, materials utilised and occupation requirements will all affect what maintenance activities are needed and how often.”
One area that can lead to challenges for property owners is ensuring their financial controllers appropriately ring fence the funds recommended in the maintenance plan.
“Asset life cycle planning includes capturing data on building elements and components using rating scales, to allow for future updating, reporting and financial planning. Ongoing operational costs (OPEX) are split from capital expenditure (CAPEX). However, Finance teams have been known to move operational funds to the capital side of the balance sheet, which has left property owners short when they go address the tasks outlined in the plan.”
With experts predicting continued growth of the economy, the country’s property industry looks like it’ll only get stronger. For commercial property owners, Prendos Building Surveyors will play an important role in ensuring their assets are properly maintained in the long-term.
“By maintaining the countries’ growing property asset base, we’re ensuring the functionality and value of these assets is secured over their expected life. It’s a win not only for the property owners, but for the occupiers of these buildings and for the New Zealand economy as a whole.”