As G7 economies battle the subprime crisis, emerging markets continue to power ahead. So does construction there.
The huge number of companies setting up in the region is driving demand for office and residential space. Driven by a mix of compact cities, expensive land and corporate ego, 16 of the 20 tallest buildings in the world are already located in Asia or the Middle East, the tallest being Taiwan's 508 meter-high Taipei 101 Tower. This spring, Mori Building Co. will add to the list the Shanghai World Financial Center, No. 2 at 492 meters tall.
In Shanghai's Grade A office space sector last year, 227,100 square meters were added, vacancy rates fell to a record low of 2.5 per cent and average rental price climbed by 11.3 per cent year-on-year to $1.14 per square meter per day, reported Colliers International. Meanwhile, figures from Reis show the vacancy rate for US office buildings rising to 12.8 per cent in Q4 2007, the first increase in four years.
In pictures:
The world's tallest towers
World's fastest elevators
Is a bubble brewing? Maybe, says Piers Brunner, managing director of Colliers International in Hong Kong, but "certainly in Asia we appear to have low vacancy rates and demand is strong." Barring any major market crises, Jones Lang LaSalle predicts skyscraper growth in Asia will continue through 2012.
Yet skyscrapers have always been part utility, part bravado. Emaar Properties Executive Director Robert Booth proudly called the upcoming 162-story Burj Dubai, slated to be the world's tallest building in 2009, "a symbol of human endeavor and success that makes Dubai one of the finest cities in the world."
The "bigger is better" mentality started in the 1920s and 1930s when American tycoons competed to construct the tallest building in New York--the Empire State Building and Chrysler Building being two prominent examples. "In a similar way, cities in Asia, particularly China, which are spreading their capitalism wings, are eager to show their new strength and power through tall buildings," said architect and author Anne Warr.
In pictures:
World's largest shopping malls
World's fastest trains
Skyscrapers are still coming up in the US and Europe--the Freedom Tower (417 meters) and Bank of America Tower (366 meters) in New York, the Trump International Hotel and Tower in Chicago (424 meters) and the Phare Tower in Paris (300 meters) are just a few examples--but the planning system for skyscrapers in the West is complicated.
Nicholas Brooke, former president of the Royal Institution of Chartered Surveyors and chairman of Professional Property Services. noted that while developers in Hong Kong can get permission to build a high rise in six to 12 months, it can take two to three years in the US due to public attitudes and community involvement.
Also, because Asian countries are competing against neighbors for foreign investment dollars, skyscrapers there are commonly backed heavily by local governments, said Jones Lang LaSalle's Head of Research for China, Kenny Ho.
In pictures:
World's biggest planes
Biggest planes of the future
One benefit of the high rise boom is the engineering breakthroughs, including deep foundations (steel piles were driven 80 meters into the ground for the Jinmao Tower) and safety features such as fluid dampers that absorb strong wind gusts on upper level. New constructions also aim to be more energy efficient. "Sustainable development is a major theme globally, and investors should not miss out on this trend," said Ho.
The Freedom Tower, which will finish in 2011, is designed to meet the US Green Building Council's requirements for Gold Leadership in Energy and Environmental Design certification.
As the skyscraper war rages on, developers should remember that size isn't everything. Structures more than 60 stories high can become less efficient in terms of structure, lifting and cost, warned Brooke. And as North Korea's structurally flawed and incomplete Ryugyong Hotel (330 meters) proves, architectural hubris can backfire.
More down-to-earth builders may be relieved to find that opportunities may lie right under their noses--Dutch engineers recently got the green light for a 7.4 billion pound underground city in Amsterdam, and expect to begin construction in 2018. If the project is successful, real estate investors can look forward to grabbing "low" hanging fruit.
