Insurance rates in Wellington more than double 2010 rates

30 October 2014

Data shows insurance rates in Wellington more than double 2010 rates

Property Council’s annual Operating Expenses Benchmarks (Opex) shows insurance premiums for commercial property in Wellington CBD have more than doubled since 2010.

The 2014 publication shows insurance rates for commercial property in Wellington’s CBD at $22.11 per square metre a year, 175% higher than insurance rates in Auckland CBD at $8.05 per square metre.

Rising insurance premiums are also evident in a time series analysis of buildings that have been in the survey each year since 2010. Despite a small sample size, the time series analysis clearly shows that since 2010, rates have more than doubled, from $9.63 per square metre, to $22.01 per square metre this year.

Property Council Wellington Branch President Mike Cole said Wellington properties had faced huge insurance rate rises since the Canterbury Earthquakes.

“Wellington property owners have been hit hard by insurance. We are seeing rates returning to pre-earthquake levels for modern buildings, but insurance is still an issue for older building stock.

“There is clear evidence that rates peaked in 2013. While those huge rates are starting to reduce, many older buildings still face rates that are tens of thousands more than pre-earthquake levels.”

Despite the high insurance rates, the Opex shows overall total operating expenses in Wellington CBD matching those in Auckland CBD, which has higher operating costs (including energy, administration and HVAC).

The Opex Benchmark is a factual overview of information based on a survey covering 96 office buildings and 29 shopping centres, with a combined total rentable floor area of more than 1.3 million square metres.

While the sample size has almost doubled since 2012, Property Council is seeking more participants.

About the Opex
The Benchmarks provide building owners and managers with a tool for preparing operating budgets and evaluating the performance of properties. They are also frequently used by valuers, developers, consultants and others involved within the property industry. Data has been provided for 12 month periods ending 31 March 2014 and 30 June 2014.

The Benchmarks contain the following features:
• summary results for office building samples
• operating profiles by city, size and quality grade for office buildings
• time series analysis of selected office building expenses
• summary results for shopping centre samples
• time Series analysis of selected shopping centre expenses.

The Benchmarks indicate typical costs and highlight the wide variations which exist even where buildings are relatively similar. These variations are a fact of the marketplace.

Information is presented by office building location, size and quality grade, and by shopping centre category. In each of these reporting categories information is provided, where possible, for:
• median cost per item
• lower and upper quartile cost per item.

Each building category lists costs in sub-headings relating to:
• statutory charges
• operating expenses
• supplementary statistics including income information.

About Property Council New Zealand
Property Council is New Zealand’s commercial property voice. Property Council represents New Zealand's office, industrial, retail, property funds and multi-unit residential property owners, investors and managers. Property Council’s branches throughout the country represent some of the largest commercial property portfolios in Auckland, Waikato, Bay of Plenty, Wellington, East Coast/Hawkes Bay and the South Island and Otago region, the value of which exceeds billions.

ENDS

© Scoop Media