Building insurance valuations Sydney wide is not something to leave to speculation. As experts in the construction and building industry, we know there is a big difference between a market valuation and the actual costs of reconstruction. A comprehensive building insurance valuation report will ensure that in the event of an insurance claim you are not left out of pocket.
At Washington Brown, we base our building insurance valuations on the full cost of rebuilding, in the event of total destruction. We don’t do this so you’ll pay a higher insurance premium. We do it to protect your investment. Our building insurance valuation report will outline costs for demolition, site-clearing, professional fees, compliance and reconstruction.
Property: Office and storage building
Description: 8 levels above ground comprising inner city storage facilities and office suites with 1 level of basement parking
Age: Built in the 1970s
Location: Melbourne Central Business District, Vic.
In 2009, we were approached by a large property management company to assess the replacement cost of a building that had been newly acquired by one of their major clients. The assessment had already been completed in pre-acquisition stage by a well-known property valuation company, together with their valuation report.
Note that the valuation documents, or any particulars they contained, were not disclosed to us prior to our report preparation. We did not know the purchase price of the property either as the buyer did not want to disclose it at the initial stage.
After reviewing all the documentation provided, and consulting with the property manager, we carried out a detailed inspection. It was in the heart of the city so we scrutinised the accessibility and adjoining buildings which have a major bearing on city construction.
We released our assessment with a recommended amount for the replacement of the building of $30 million. We received a phone call within one minute. The conversation went along the lines of, “There must be a mistake? The client only bought the property for $13 million. The valuation report recommends a replacement value of the building to be $7.5 million. Surely there cannot be such a difference?”
- All available assessments in the past until the valuation report, had been based upon a generic index with no consideration of the original source until now
- The valuation assessment considered the building cost to be proportional to the assessed market value and in line with previous insured amounts.
The lessons learned were:
- Never rely on a previous insured amount, as it could be based on indexing for the last 30 years
- Market value should not be considered a proportion of the replacement cost, which in this case was further exacerbated by the brief downturn in the office property market
- The overall cost-per-square-metre was unrealistic upon analysis. It would have only built a simple factory out in the suburbs.
Needless to say this client is still with us today.
To get a quote for a building insurance valuation visit here – building insurance valuations Sydney