A property mogul developing some of Wellington’s most infamous quake-prone sites says the Government’s shake-up to the building system is positive but won’t stop him spending tens of millions of dollars on strengthening work for his large-scale projects.
Eyal Aharoni is currently working on reopening the long-closed Reading Cinema complex on Courtenay Place and the nearby Amora Hotel, which closed in 2019 and 2017 respectively because of earthquake damage.
Speaking to the Herald about the new earthquake strengthening rules announced this week, Aharoni said while it is a “positive move” for apartment owners and will hopefully stop the eyewatering bills for council strengthening work, he still wants to strengthen his buildings to the highest degree.
“I don’t believe it’s going to have any impact on our buildings,” he said.
“The reasons that we’re repairing the buildings is not necessarily what the Government want us to do, it’s what the customers want us to do and what the insurance wants us to do.”
Aharoni, who featured on the NBR rich list with a net worth of $550 million, has lived in Wellington since 1988, when he began his New Zealand empire under his company Primeproperty.
Currently, the expected seismic performance of an existing building is compared with that of a new building. The result is then expressed as a percentage. A building assessed at less than 34% must be either strengthened or demolished within a specific timeframe.
“A building’s overall risk status is determined by its weakest part, meaning even a small defect can result in an entire building being classified as earthquake-prone,” Building and Construction Minister Chris Penk said.
Under the revamped system, a new building standard (NBS) percentage will no longer be used. Instead, earthquake-prone buildings (EPBs) will include concrete buildings that are three storeys or higher and those constructed with unreinforced masonry.
But Aharoni, who noted he is not an engineer, said regardless of the rules, he intends to bring his buildings as close as possible to the NBS despite the tens of millions of dollars it will cost.
He predicts the cost to strengthen the Amora Hotel, which he expects to reopen as a 4.5-star hotel at the end of 2027, will come in at $20m, as well as a forecast fit-out cost of $60m.
“It makes no sense for us to spend $60m and put in a high-level fit-out of a hotel while the structure remains below 33% or earthquake-prone or weak seismic or whatever the new term’s going to be.”
The Reading Cinema complex, Aharoni said, is the same “we are bringing that project to probably 80% [NBS] we have a number of tenants who put their hands up to occupy the premises and all of them don’t want to move into an earthquake-prone premises”.
The building is due to reopen at the end of next year after $10m of strengthening work and a $30m fit-out, costs he said would be shared between Primeproperty and the tenants.
The property was previously at the centre of a controversial deal between Wellington City Council and Reading International last year, after the council tried to buy the land under the quake-prone building to incentivise development.
After that deal fell through, the site was listed for sale, with Wellington-based Primeproperty Group revealed to be the new owner.
“I’ve lost a number of buildings myself, so I don’t want to invest in a building that I know, if there is an event, I’m going to lose it,” Aharoni said.
He said the legislation changes will have an upside for Wellington City Council, which he feels has gone “overboard” on strengthening work.
The council is currently working on strengthening and redeveloping the Town Hall, a project that has blown out to $329m.
The mayors of Auckland and Wellington have welcomed the Government’s changes, with the capital’s Tory Whanau calling it a “huge win” for the city that removed a billion-dollar burden.
“Many apartment and business owners simply cannot afford to upgrade their buildings to the current standards; you can see that reality in the empty buildings around town,” she said.
Aharoni also said it will be a relief for unit-title apartment owners, who have struggled with the current regime.
Other positives, he said, were the changes to rules meaning buildings in a low seismic zone, such as Auckland, Northland and the Chatham Islands, could not be deemed earthquake-prone.
The Government’s new regime is expected to save New Zealanders more than $8.2 billion in remediation and demolition costs, Penk said, and gives effect to recommendations made in a review that emphasised the need to keep costs proportionate to risk.
Ethan Manera is a Wellington-based journalist covering Wellington issues, local politics and business in the capital. He can be emailed at ethan.manera@nzme.co.nz.