The Opal Tower complex's investors and unit owners are at risk of financial losses due to a crisis concerning the four-month-old property.
According to a report by news.com.au, a loud “cracking” sound was heard by the residents of the 36-storey building in Sydney on Christmas Eve. This prompted people living in 51 units to immediately evacuate. Investigation showed cracks had formed in a concrete panel, according to a report in The Guardian. The damage was severe enough to shift the building. Although residents were eventually let back in, they were later evacuated a second time so the damage could be assessed.
Realestate.com.au Chief Economist Nerida Conisbee said in an interview with news.com.au that the amount of money lost by Opal owners cannot be projected at the moment, given that any potential price decline would depend on whether or not the issues could be resolved.
In a report by The Sydney Morning Herald, though, Edwin Almeida, real estate expert and commentator, estimated a 50% drop in the value of apartments in the western Sydney block.
According to Conisbee, the catastrophe would significantly impact the weakening of the new apartment market.
“I can say that an incident like this is highly unusual in Australia, where we have strict building regulations. It will impact upon confidence in the new apartment market. This market has taken a hit already with the drop in investor activity,” Conisbee said.
She also said the incident serves as a reminder for prospective buyers to be more cautious, noting that one resident of the apartment complex claimed that owners were facing "financial ruin."
Mark O’Brien, a tenant, said in an interview with Daily Mail that an owner purchased her flat for $1 million.
“The apartments are quite nice … But beauty only goes skin deep in this case, I guess. I feel sorry for the poor people who bought a place there. I saw there was a young lady who bought one, paid a million for two bedrooms … that’s just awful. You’d be lucky to get 40% of what you paid for it. These people will be crippled for life," said O’Brien.
Australian Associated Press initially reported that the problem was not with the prefabricated concrete panel. Instead, the damage was likely caused by the way it was installed, or due to issues in the design or construction of the building.
Icon, the builder, and Ecove, the building’s developer, have yet to explain why such a catastrophe happened.
“We honestly don’t know what has caused this panel to fail. That’s the reason why it’s taken so long to give residents information," said Ecove Director Bassam Aflak.
The residents, meanwhile, have lashed out at developers and made it clear that they don’t want to return to live in the "crumbling" building.
Resident Vivian Lu told The Australian that she didn’t want to return to the tower to “live in a construction zone.” She has been living in a friend’s home nearby Ermington since she evacuated her level-34 unit.
“How can they ask us to move back after evacuating twice without any report of what caused the damage? If the developer and engineers say the building is safe, they should buy my units back from me. I’ll give them 10% off," she said.
The sentiment came as photos showing the extent of the devastation surfaced. Metal props were being used to support the cracked building and keep ceilings in place inside apartments.
There were also pictures of ripped carpets and holes cut in walls.
An Icon spokeswoman explained that there are about 180 “precautionary” props being used between level 10 and the basement “in case any cracking re-occurred.”
New South Wales Planning Minister Anthony Roberts told the developer and the builder to "spare no expense" in ensuring the welfare of the Opal Tower residents who have been in temporary shelters while investigations are ongoing.
Ecove did not confirm if it would offer to buy units back from residents. Ecove and Icon have been releasing contradicting statements, and it remains unclear to more than 300 affected residents who will be responsible for the fiasco.
Ecove’s founder said that the ball is in Icon's court. “It’s come as a shock to all of us. It’s a very unusual situation and, as you can appreciate, there’s no way Icon would ever want to be in this position just given their brand and reputation," Aflak told The Australian Financial Review.
Some property owners have already met to explore filing legal actions against the builder and developer.