10,000 buildings suspected of having flammable cladding

By Leith van Onselen

Things have gone from bad to worse for Australia’s apartment market, with firefighters identifying 10,000 buildings along Australia’s east coast with suspected flammable cladding. From The Australian:

Firefighters have drawn up a hit list of up to 10,000 buildings across the eastern states with suspected highly flammable cladding…

Combustible aluminium polyethelene, which fuelled the rapid spread of flames at Grenfell, as well as a similar firestorm at Melbourne’s Docklands in 2014, where the blaze spread 13 floors in 10 minutes, has been found wrapping structures across the nation…

Right along the east coast, apartment owners are being stung by huge costs and are embroiled in legal battles to rectify their buildings, leading to long and expensive legal battles whereby the defendants along the supply chain all pass the blame. While lawyers are making a killing, the apartment owners and potentially taxpayers will likely end up being liable for the remediation works.

When viewed alongside growing concerns around structural integrity and build quality – as highlighted by the huge cracks found at the newly constructed 34-storey Opal Tower at Sydney’s Olympic Park – the reputation of Australia’s high-rise has taken a battering.

Moreover, this reputation hit has come at precisely the wrong time, given there is a veritable flood of apartments yet to hit the market:

We already know from CoreLogic that many recent apartment buyers are drowning in a sea of negative equity:

The situation will likely get much worse as wary buyers avoid the segment, settlements fail, and delinquencies and developer insolvencies lift.

A high-rise bust is looking more likely by the day.

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Unconventional Economist
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Comments

  1. Lol. Ten-fecking-THOUSAND!

    Looks like the subject of the next Royal Commission. I think I’m going to call it.

      • It’s a good thing we are not in the middle of a heat wave or anything. I mean imagine if we were to expect 40 degree days in a row. I’d be worried then. 😁 Suddenly buying a house in a bush fire region seems less risky.

    • Mining BoganMEMBER

      Is there really ten thousand or are the firies trying to force the hand of gubmint and developers to release the details of where the burny stuff actually is? Because, you know, that information might come in kinda handy when getting ready to fight a fire.

      Although, a 40 storey tower going up in 15 seconds might be a giveaway…

      • ErmingtonPlumbingMEMBER

        The only people who have that information are the Cladding contractors or Builders that illegally installed said cladding.
        None of these building were specified to have flammable cladding installed,…it’s a predictable cost cutting out come when the construction industry is allowed to “Self regulate” and certify their own work.
        If there is no meaningful enforcement of the Regulations that exist,…then they WILL be ignored.

      • And if they are smart, there is no actual records, so the only way to know is to get a reliable inspector to go check all the buildings. Whether one of those is like rocking horse poo these days I have no idea.

      • The record will say there is no flammable cladding. The certifier does not checks what is installed, and certificate is issued based on paperwork only. I remember reading an a new article with a quote from a certifier : he made sure he never get within 100 meter of the building he certified to reduce his legal liability.

      • One of my old school mates is a Fire Safety Engineer in Sydney. Caught up for our annual drinks over Christmas. He reckons he can count on his fingers and toes the number of recently built high-rise buildings that DON’T have combustible cladding. It was pretty much standard before Grenfell.

  2. This sums up Australia and how we do everything. We desperately need great change and great leaders, but there is neither on the horizon, just all the same as the past appearing like they have something different on offer.
    Who ever is responsible for this in government should be sacked immediately with no benefits.

    • We’re like that kid in the gym on steroids. Pumping weights looking in the mirror flexing and showing off at the size of those pecs. After gym we head to Macca’s for a burger and coke and eat dirty all week. Go out drinking on the weekends and yet on the outside look impressive. Sure a bit of acne on the skin, but in your 20s nothing really bad happens. Then we got our 30s and 40s and things are starting to unravel. By 50 we have a heart attack. Nobody can understand it as we looked so healthy on the outside, but inside we were rotten to the core. Cheating for every gain until all that debt catches up with you and eventually paying for every shortcut we took in our youth.

    • ErmingtonPlumbingMEMBER

      The responsibility lays with the shrieking Anti-Government, Thatcherite, Neoliberal brigade, always demanding (and getting) less regulation, less red tape, less Government “interference” always with the goal of empowering and enriching the few.

      https://www.smh.com.au/entertainment/art-and-design/opal-a-planning-failure-not-just-a-transport-card-20190103-p50pg1.html

      “There’s been much talk of cracks and crackdowns after the Opal Tower fiasco forced Olympic Park residents of new apartments to spend Christmas in their cars. But what was really cracking from side-to-side was the smooth face of neoliberalism, revealing the ugly lie that good governance can be contracted out.”
      .

    • From what I’ve seen there’s absolutely no consensus in Australia wrt “what needs to be done”.
      “something needs to be done” is a just political catch-cry, this is not the same as having a specific cultural / social goal that is achievable if the guberment just gets on board. Look at the industries that have been expanding dramatically over the last 10 years and tell me why they’re not symptomatic of the decay problem …..as opposed to being nascent green-shoots of an emerging solution space?
      The government can’t fix this…the main reason that I say this is that most of the population still can’t understand why the government can’t fix it.

      • Is the main reason because the government has no incentive to fix it, but plenty of incentive to maintain the status quo?
        Or did you mean something else?

  3. The problem with high rise buildings, in Aus at least, is the lack of value. People are paying anywhere between $6,000 to $10,000 per metre square when the damn things only cost $2,500 per metre square to build. High maintenance costs (lifts) just compound the problem. When prices halve that would be fair value irrespective of whether we are in a bull or bear property market.

    • I recently started looking at a flat / unit / apartment for city living with a house rural. We have kids.

      The purchase price of a small 3 bedroom apartment was close to the price of a full 3 bedroom house on a large block of land. Then add in rates and body corporate fees and it was pushing $12k or more per year just to live in your own house.

      I really was shell shocked. Its just as expensive to rent an apartment as it is a full house.

      I was looking from Rosanna through to Fairfield – Northcote – McCloud , anywhere north. Completely mind blown.

      They START at around $1.2 -$1.3 Million

      https://www.realestate.com.au/property-apartment-vic-ivanhoe+east-128610130

      On average it costs around $1.5 Million while many are well above $2-$3 Million for an apartment.

      No – I am NOT talking about Penthouses or top floors.

      Or for $1 Million I can have 3 bedrooms with a pool over looking the park

      https://www.domain.com.au/176-beverley-road-rosanna-vic-3084-2014690243

      Or for HALF THE PRICE i can have 760 m2 house fully renovated over looking the park –

      https://www.domain.com.au/270-banyule-road-viewbank-vic-3084-2014717500

      These apartments are going to be worth a quarter of their current value.

      Can’t wait to get me a nice pad in the city for absolutely nothing.

      • “I recently started looking at a flat / unit / apartment for city living with a house rural.”
        This statement contains all the reason for the situation. Until the high income employment moves out of the city the situation won’t greatly change.

      • What ?!!

        Sorry – no. This is literally the most uninformed post of all time. Its a bubble.

        Moreover I am looking at rural victorian property which is literally the most expensive land on planet earth.

        Nothing to do with income – entirely due to absurd property bubble with people crippled by debt and needing these prices in order to avoid suicide.

        So no. Just no.

      • “I am looking at rural victorian property which is literally the most expensive land on planet earth.”
        Lol.
        how much does the 1/300 of a block of land attached to an apartment in the Sydney cdb cost?
        how much rural land will that buy you?

      • I’ve also been looking at rural land prices or small country towns in Vic and have been gobsmacked at the prices. Unfricken believable. When I’m ready to buy there’s a good chance I’ll have to leave the state.

      • Come up to Heathcote and bring your clever head! I’m switching from animals and olives to Shiraz. Best Shiraz on the planet and I’ve got permanent water 17 meters underground.

        Macrobusiness should do equity crowdfunding so I can raise my capital from normal, clever people.

    • Or you won’t be living there anyway due to the building being delivered unfit for habitation. So… No biggie.

      • Perfect way to boost GDP!

        – build tower badly (GDP!)
        – no one ever moves in
        – cracks appear
        – fix cracks (GDP!)
        – cladding revealed, building burns down
        – clear site, market next project (GDP!)
        – repeat

  4. Out on the footpath we sit,
    Watching skyscrapers un zip,
    An Inferno, what’s new,
    Lives in jeopardy, who knew,
    We laugh & sing – This is (Now) Australia……

    • Haha, someone needs to do a full parody like this. Kind of like that I’m a bloke I’m a yobbo and my best mates name is Robbo. Winfield is me cigarette..

    • Mining BoganMEMBER

      We told our three-year-old nephew that the race driver suit we gave him is made of asbestos for safety. He loves asbestos.

      It’ll make a comeback one day. He’ll make it happen. It’s all he talks about and he likes building things.

    • reusachtigeMEMBER

      Asbestos is such a handy product and nothing beats it for fire resistance. What we need to do is bring in tonnes of guest workers to mine and process it for us. I have no doubt that there’s really poor third world countries like Bangladesh where they’ll happily forego their safety to put food on the table back home for their 15 kids.

      • reusachtigeMEMBER

        @herald – Save that one up our sleeves. We offer the carrot of PR for the guest workers, if they survive, and their extended families, not just their immediate families. I have no doubt we’d get literally millions of applicants meaning that we could pick the fittest amongst them and pay them very little to do the job. It’s an opportunity to become the world’s powerhouse in asbestos once again. We need more vision like this!

      • Reusa don’t forget to ensure that private health providers have the appropriate clauses that prevent these migrants getting cover. I mean they can take out private health care if they wish and they should believe they are covered, but in the fine print they are not.. We don’t want those Mesothelioma cases to become a burden on the wealthy .. instead we will make sure Medicare pays. After all the taxpayer is responsible.

      • ErmingtonPlumbingMEMBER

        It is a great product, whenever I get to break some up I do and carry it in my truck to use as spacers when needing to level up washing machines, vanity basins etc etc in customers houses.
        I tell em it’s not Asbestos and they always believe me.

      • bolstroodMEMBER

        Asbestos is such a handy product… we could put it in Baby powder… Oh, sh!t J&J already did that.

  5. What’s happening is the insurance companies are tell people their insurance will go up a lot and in some cases double every year until they get it fixed. It’s not necessarily illegal what these companies have done installing this cladding.

    • I know of one such building in Parramatta, with 130 apartments. Last year the insurance was $65k; this year, five companies refused to even quote and the sixth is charging $220k.

  6. reusachtigeMEMBER

    I really hope they stop removing the cladding. It’s what makes buildings look really neat and pretty.

  7. those 10000 buildings (each with dozens or hundreds units) constructed in last decade or two are clear sign of housing shortage that pushed unit prices to the moon

  8. I wonder if the apparent comparative strength of western Sydney Housing market is occurring because first time buyers are deciding that a $700K stand-alone house out in woop-woop is a better choice than a similarly priced apartment in Rhodes or Chatswood.
    Neither is a good investment but in this case they’re just picking the least bad option.

    • good point.. have been thinking same.
      Also to add, this is how the death spiral will start. Shity apartments near the city will start to drop (probably losing 50-60% in value) in order to find the new normal where many people will see them as fair value over $700k dog box in woop woop. Then woop woop houses will respond with their own price falls in order to find new buyers and so on.
      As long as credit tightening stays (and I can’t see how banks will start doing same after the RC) and China manages to keep hot money away.

      • I think this also goes a long way towards explaining why the price falls to date have been so dramatic on the lower north shore (beginning of the west) . Places like Ryde have seen 20+% falls for your typical 50’s brick veneer 3 bedder on a big block of land. Paying over $3M for knock-down houses in these areas only ever made any sense if you had some reasonable expectation that a high rise developer would buy the block at some time in the next decade. If that dream is dead than these areas still have a ways to fall.
        Unfortunately I really don’t know Sydney much further west than Dundas,
        What is there out there that anyone really wants to be a part of? Honest question, Are there housing areas / suburbs west of Parramatta that people really aspire to own of their own accord (as in not as a rung on the property ladder)

      • fisho – people bought west/south of Parramatta because they could get a house with a sizesble yard at an affordable price. Now we are seeing apartments in places like Blacktown and Casula – I really can’t understand who would buy those.

      • Yeah that is a huge unknown probably belongs in the class of unknowable unknowns.
        Makes you wonder how anyone expects to be able to sell these poorly constructed far western Sydney apartment complexes when they start to fall apart. It’s one thing to own a poorly built 3 bedroom shi4box that you can repair renovate or knock-down when the upkeep costs sky-rocket. However the same options clearly don’t exist for apartment owners these buildings are without doubt tomorrows slums.

      • “I really don’t know Sydney much further west than Dundas”

        No offence but you have well and truly left Sydney by the time you’ve hit Dundas. I know we try and get all global city now and then but there are suburbs and then there are exurbs. Parramatta is historically a separate city even though now it is considered a suburb.

      • Sydney is usually used to refer to greater sydney metropolitan area, so pretty much woolongong, to blue mountains to central coast at this point. Sydney City would usually be used to refer to the inner city area.

    • I’m not sure there was so much new apartment demand around in Oct Nov last year (pre Opal) that diverting it to houses will make much difference.

      Recall too that a lot of apartment buyers were investors using debt. The destruction of apartment values will destroy a lot of equity and that is money that disappears from the system. Basically there is less money around. Investors and developers going broke. No boost to houses comes from that.

      And a lot of others were overseas speculators. They only wanted new properties. Not a sh!tbox in Mt Druie.

      Nope. This is more than enough to pull the whole show down.

  9. I love it. Across the board, the housing sector is being confronted with reality. The powerhouse of our economy is at credibility ‘0’. Wow … where does that leave us? The leeches in that sector will be shaking in their boots … I love it.

  10. The thing is, this stuff is purely decorative. If I were a unit owner I’d be more worried about every other part of the building.

    This would include all wet areas and waterproofing, all facade glazing systems, ie window wall. Fire and acoustic separation between units. Fire egress provisions from 100metre plus unit towers, hello private certification and fire engineering.

    General workman ship in the concrete superstructure.

    Thermal performance of black window walls systems.

    Unreliable flow rates from council water supply and inadequate storage for sprinkler tanks in case of large scale fire.

    Non existent falls in flooring to wet areas.

    Lightweight fire rated party wall systems between dwellings.

    lol the facade attachments which either compromise the thermal and water envelope. Which will need a strategy for maintenance of their own. Materials don’t last forever.

    Access to natural light for units with single aspect to side boundaries.

    Lift provisions inadequate for air bb or slum usage.

    You would have rocks in your head to buy anything built as investor spec in last 5-10 years.

    When I started out as an architect 20 odd years ago what we were commissioned to design and deliver back then are twice the size and built by people wanting the job.

    Race to the BOTTOM

    • You worry too much, property doubles every 7 years. Just buy now using an IO loan and negatively gear the rest. You’ll have double your money in just a few years. Someone else can deal with “problems” later down the line.

  11. On the bright side, replacing all that cladding might keep a few former building workers off the dole queue for a while. But, supply of materials on that scale might be a challenge.

  12. Why isn’t the list publicly available? Don’t people have a right to know if they are living in possible firetrap?

    • Tenants definitely want to know this but do landlords or owner occupiers really want this information made public?
      All sorts of strange consequences emerge when buying is all about the dream of unearned gains when you sell, we wouldn’t want to scare off potential buyer by having a report of deficiencies made public? if for no other reason than that it would be hard to deny knowledge of this if such a public report existed (full disclosure and all that stuff)

      • What kind of duty of care prevails here? I mean if the Fire Department, (and therefore the government) has knowledge that people are living in a potential death trap, are they not under some sort of obligation to let them know, as opposed to just working with the owners who have all sorts of incentives to hush it up?

      • Real Estate agents would also be liable for not informing prospective buyers. I reckon that’s the next round of litigation, hence the don’t ask, don’t tell policy being adopted.

      • “Duty of Care”??? what for tenants…don’t make me laugh NSW tenants have no rights…come to think of it they have one right, the right to F-off when the landlord decides it’s time to sell and the right to pay for damages to the poorly constructed shi4box they called home (while it suited the landlord) even NSW prisoners have more rights than our rent slaves.

    • Because no one has a “List”. The fire department is probably just counting every building built since year X.

  13. If I were a terrorist (Hi ASIO!) I would see this as a massive opportunity. Zero planning needed, just drive up and lob a sticky molotov. There’s no way police or rescue services could keep up.

  14. All modern high rise building have a sprinkler system on every floor, so even if the flammable cladding catches fire, the sprinkler will stop the building from going up in flame in a flash, and there will be sufficient time for people to get out.

    The damage bill however would still be massive.

    • Yeah right.

      https://www.news.com.au/finance/real-estate/opal-tower-collapse-part-of-legacy-of-nsw-building-disasters/news-story/3ee61a18a5671dfc871121ac4f39975b

      “Among the major building scandals to predate the Opal Tower fiasco was the string of defects inside a block of 40 units constructed on Bunn St in Pyrmont over 2001.
      The City of Sydney issued a rectification order for the block in 2009 due to fire safety concerns.
      Residents were told to leave while the safety issues were fixed, but had to wait until 2015 for all the works to finally be completed because of a complicated legal battle.”

      and 2001 was over a decade before the building standards really slipped.

    • All modern high rise building have a sprinkler system on every floor, so even if the flammable cladding catches fire, the sprinkler will stop the building from going up in flame in a flash, and there will be sufficient time for people to get out.

      Huh? That’s exactly what doesn’t happen with flammable cladding. That’s the whole problem.

      The sprinkler systems deal with internal fires, but nobody thought that the external walls would catch fire so there’s nothing there to prevent the spread of the fire. So, as at Grenfell and that place in Melbourne, the fire zooms up the flammable outside walls like a rocket, and then travels inwards, the fire suppression systems are overwhelmed and the occupants become crispy critters.

      There has been talk of retrofitting sprinklers to the outside of buildings, but that’s all nonsense of course.

  15. TailorTrashMEMBER

    When the economy turns to custard the ALP will have a ready made “pink batts scheme “ set to go
    We can have a flood of new companies set up to remediate these buildings . They will no doubt employ cheap 457 labour and a lot of people will get rich quick
    on the nice government money . When it blows out to the billions we will abruptly cancel program and wharehouses full of the new cladding ( which will of course be made in China ) will have to go to the tip .

    When the pink batts scheme was abruptly cancelled CSR took something like 24 million in pink batts and dumped them as it was cheaper than paying outside storage costs .
    Getitintaya Straya !

    • ErmingtonPlumbingMEMBER

      I ignored good advice to jump onboard and take advantage of that pink batts scheme,…woukd have an extra 1or 200k of the mortgage by now if Id jumped on board.
      Knew small trade operators like me who were financially saved by that programe.

      I wont miss out a second time.

    • Absolutely brilliant and well thought out as expected

      “Important:

      – Only one registration per building is allowed, including apartment buildings.
      – Just because a building has combustible cladding, does not mean that it is unsafe.
      – Owners (or owners’ agents) are required to register. Tenants should talk to their Property Manager/Agent or owner if they have concerns about their building.
      – Penalties can apply for failure to register.
      – Information you provide by registering will be verified and you may be contacted by the NSW Government or your local council. Please ensure that any information you provide is as accurate as possible.”

      I love that only one registeration per building, yet fines apply for failure to register – who gets fined?

      How do you find out if your building is already registered – I’ve just emailed them to ask if they can provide me with a list.
      [email protected]

      • J B – to answer your rhetorical question – the threat of a fine is classic public service butt-covering.

      • I think the really important question is,
        Do I have to register every building with cladding, or only flammable cladding? And how do I tell? Light it up and see what happens?

      • ErmingtonPlumbingMEMBER

        Drill out a small core sample.

        My guess is that easy access panelling in most cases will be legal with the illegal flamable stuff higher up where Cherry pickers or scafolding is required to check.
        These pr!cks knew what they were doing and some of the more prudent scumbags woukd have bkended legak and illegal together.
        Both types have the same thin Aluminum colour coating.

      • I actually went and looked at the site, the list will only tell you a building has cladding. If you have eyes you can work that out for yourself. I guess it gets interesting when they start testing it.

  16. Government paying for it at a federal level – it’s got Bill Shorten written all over it and is exactly what he’d do. Stimulate the economy, make some work for the construction industry (especially in the time when they’ll be starting to get hammered by the property downturn), help out his union mates.

  17. Good business opportunity, going around replacing all the flammable cladding with inflammable cladding…

  18. Got a cracked and broken appartment? Time to take up the ancient Japanese art of Kintsugi and turn that trash into treasure.

    • The model in many Asian cities is perpetual renewal of the urban landscape that means that buildings are not constructed with a 50-100 year time frame in mind. Instead, it is a constant churn. The materials and trade skills in several Asian cities are extremely low and the quality of the concrete itself nothing that would pass western standards (try drying concrete slowly in the tropics). But it matters very little as very few buildings will need to survive 50 years.

      Here’s the business model: If you can get enough people locked into a small area (Hong Kong, Singapore) or have a constant flow of migration to large cities (Bangkok, KL, many Chinese and Indian cities) the land price and demand will permit constant renewal and resale.

      In Australia the mass immigration and concrete dog-box lobby has used every trick in the book to promote this scheme. The reality of it is that it means that we build future slums and pass the economic and social costs to those who live there. This is how people like High Rise Harry became billionaires – by stealing the amenity of Australians along with their rights and cultural expectations of higher quality construction. He did this hand in hand with our politicians who deregulated and opened the floodgates.

      The simple fact is that the people most willing to live in poorly constructed, high density dwellings are people who see this as normal. Hence, mass immigration was all about bringing in a low expectation of quality matched with a willingness to pay top dollar for what most Australians did not want. You need to cut expectations and generate a slum lord normal.

      It is the exact opposite to the Swiss model.

      Deregulation and mass immigration has worked very well for the rent seekers. Unfortunately, Bill (“I was best friends with the Pratt family”) Shorten is fully behind this scheme.

      The true believers? Remind me, what is it that the ALP believes in?

  19. Eventually one of these cage tower high rises is going to go up like a Roman candle with a massive loss of life.

    And like Grenfells it will be found the building had 2 or 3 times the legal occupancy / packed full of migrant guestworkers illegally subletting.

    World Tower 1,900 pass keys occupiers for 220 units.
    8.8 persons per unit average. (3 times building design & safety levels)
    Class action against Meriton who admitted their business model & strata fees were based on the invariably Asian foreign owned landlord running 8-10 migrant guestworkers per unit in sub let cash in hand bunk share.
    The whole place a nest of migrant TR guestworkers renters in bunk share – working illegally, vice, 5 brothels & 11 escort agencies.
    All foreign students & skilled visas or Non NZ born SCV. Chinese, North & South Asian, Indian, Nepalese, Bangladeshi, Middle Eastern.
    Fire on level 15? about 3 years ago.
    The biggest tallest Sydney fire engine articulated appliance couldn’t even get anywhere near the fire due to the building design.
    It’s a 65 storey building.

    Regis in Pitt Street – 2,300 Asian migrant guestworkers, for 282 units. Infested by south East Asian Chinese & Indian migrant guestworker TR in bunk share.
    Drugs, prostitution, fire petrol attacks by migrants on other migrants, all on the public record.
    Same at the Summit, Luminere opposite SCC town hall (Chinese & Korean vice HQ), Green Square, Quay apartments all the same.
    Most of Mascot Square & Zetland or Rhodes.
    Parramatta the new Mumba. Hundreds of thousands of low life migrant TR on pretext visas crammed into 4 – 6 bunks per room, sleeping inside wardrobes, on the floor.
    The unit illegally partitioned with flammable plywood or sometimes just curtains.
    Little cooking areas and the ubiquitous gas camping stoves – they will have 2 or 3 seperate gas camping stoves plus rice cookers often in the bedrooms, as 8-10 ‘foreign students’ or 3 families occupy the unit in third world filth & squalor.

    Each person paying some $170-$230 a week for the standard bunk, wifi, toilet paper & bag of rice deal.

    Their unit bought by foreign dirty money via a PR proxy and run as a sublet cash in hand goldmine pulling in $1,600-$2,000 a week rent.
    Only $500 declared & the rest to the foreign criminal syndicate plus the proxy claims NG.

    No checks on occupancy usage or fire safety.
    Building managers in on the corruption.
    Who is taking the bribes at the SCC & NSW fire authority to do nothing about the overcrowding & Fire risk?

    #### Opal Tower ###

    Was it Asian overcrowding cracked the Opal Tower?
    Let’s see how many Asians were really packed into that building.

    Report excerpt: “There is compelling evidence the wrong size reinforcing bars were placed in this area during manufacture of this panel — 20mm diameter bars were used instead of 28mm diameter bars,” the report found.

    “It is likely that a combination of some of the above design and construction issues led to the observed structural damage on level 10.”

    The engineers concluded that a “progressive build-up of load on the structure as [the] apartments became occupied” culminated in the cracking“.

    Too many Asian migrant guestworkers in bunk share & subletting ?