NABERS for Apartment Buildings has gone live and is expected to be a major shakeup for owners corporations, investors, developers and builders.
The tool – launched at this week’s NABERS conference along with new NABERS Co-assess and Waste tools – will measure and score energy and water used in apartment common property areas, such as carparks, gyms and lobbies, which can be responsible for more than 50 per cent of total energy use. Working on a six-star scale, three-star is deemed average while six is market leading.
Chris Duggan, president of Strata Community Australia NSW and joint managing director strata managers Bright & Duggan, described it as a “watershed moment” for strata.
Speaking with The Fifth Estate following its official launch at this week’s NABERS conference, Mr Duggan said that the tool would not only enable strata owners corporations (OCs) to “simply and materially” measure their building’s performance across energy and water, it will also give potential buyers insights into how the OC itself performs.
A high NABERS rating will indicate a strata community that is well-governed, has strong financials, good decision-making capabilities and good capital works plans with a budget to carry them out.
“It will become a KPI of a well-functioning building,” he said.
“I expect it will be adopted quickly by forward-looking strata corporations. It will also become a relevant tool for investment comparison.”
It will be a far quicker and more insightful guide than “trolling through OC meeting minutes” for detail on how the building and its committee function. Currently, that is the only way many potential buyers can gather information on how a building performs, he said.
The rating will also be something OCs can use to work on reducing building inputs such as energy and water for common areas, with a corresponding downward push on levies paid by owners.
Mr Duggan said he expected some developers to take up the initiative quickly too, as the rating will be seen in the market as a “mark of quality”.
It could also contribute to the developer’s brand value and be a way to distinguish a development in a competitive market, he said.
There will also be developers who incentivise their builder to achieve a result that will lead to a good rating, as once a rating is gained they have an “opportunity to hang up a certificate in their building”.
That certificate and its rating could lead to more sales once a building is complete, and stronger performance on resales.
“You also need to look at the long-term play here,” Mr Duggan said.
“What’s to say that over time it doesn’t become mandatory [to have a NABERS rating for a strata building]?”
Another group Mr Duggan said would probably take to the tool is the strata managers and asset managers who want to know how their portfolio is performing.
His own company is likely to be among them.
“Absolutely it will be useful across the portfolio.”
As well as giving a metric of how stratas are performing, it can be used as a clear and distinctly measurable KPI for strata managers to work on, he said.
And it could also help build trust in the relationship between the strata management company and its clients. That could shift the relationship to the managers being trusted advisors, rather than just holding a secretarial-type role, Mr Duggan said.
What does it cost?
The NABERS rating will involve a $1500 application fee, and Mr Duggan said the fees for the assessor were expected to range from $1500 to $5000 depending on the size and complexity of the strata building.
That could be quickly paid back where an assessor also identifies easy wins for performance improvement.
Mr Duggan said that there would be many opportunities for low-cost quick wins for a low-scoring apartment, such as upgrading common area lighting.
“It is easy to tweak that dial.”
Now it is “all about educating the market” so consumers will drive demand for the ratings, he said.
“Look at the impact NABERS has had on commercial buildings. And when you think about mandated disclosure, that will turbocharge the effect.
“The market will move quickly.”
That also means developers and owners corporations might soon start to experience “a bit of FOMO [fear of missing out]” if they don’t get a rating.
How does it work?
The new tool will rate the energy efficiency and water efficiency in apartment building common areas, and as with commercial buildings it will be based on data gathered over 12 months of continuous occupancy.
The minimum building size is four apartments in a configuration of at least two stories.
A spokeswoman for the NSW Office of Environment and Heritage (OEH) told The Fifth Estate energy use in the common areas of high-density strata schemes can represent more than 50 per cent of the building’s entire collective energy use.
She said the main benefit initially to owners corporations is that the rating enables them to understand the scale of the opportunities available to them, and how their strata scheme compares.
“This offers them significant opportunity to identify and implement energy and water saving opportunities, lowering utility bills and putting downward pressure on strata levies.
“Re-rating enables the strata scheme to track improvements and demonstrate high performance once they reach it.”
OEH also expects the rating will be used for risk assessment on the part of buyers and investors, as higher star ratings will indicate smaller risks in terms of levies from minimal energy and water outgoings, and indicate how well the owners corporation manage the building.
At the launch session, some residential property investors commented on how the tool would allow them to target low-carbon assets in the residential space, the spokeswoman said.
Tackling the performance gap with commitment agreements
OEH will be undertaking outreach to the developer sector.
“Over the next year, we will be working on commitment agreements for new builds, to encourage developers to design, build and deliver apartment buildings to high energy efficiency standards,” the spokeswoman said.
“We will be working with developers, councils and leaders in the residential strata sector to introduce NABERS Commitment Agreements as a mechanism to bridge the large gap between design and operation in this sector.”
She said NABERS had become one of the most effective government programs in building sustainability, and the expansion of it into the apartmentssector was “a reflection of the strong support for the program across Australia, and the need to bring a measurement-based sustainability focus across the Australian economy”.