Earlier this summer, the latest in a series of supertall, super slender buildings started rising from the ground on Midtown Manhattan’s Billionaire’s Row. Located at 111 W. 57th St., this ultra-luxury tower will reach 1,438 feet when it’s completed in 2018—topping 432 Park Avenue by a mere 42 feet, thereby securing the title of tallest residential building in the Western hemisphere. That is, until the Central Park Tower, a mixed use building with residential units, reaches its planned 1,550 feet on completion in 2019.
It’s clear that we’re in the midst of a supertall building boom in Manhattan, as well as in Asia and the Middle East. Today, 14 residential buildings top the 300 meter—or 984 foot—supertall threshold, with 23 residential buildings of this scale currently being raised in Dubai, Mumbai, Moscow, and other global cities. It’s a trend that started just 11 years ago, when Australia’s Gold Coast Q1 tower was completed in 2005, and one that seems here to stay.
The appeal of being up so high, said Donna Olshan, president of Olshan Realty, is that, in New York specifically, you can take in thrilling panoramic views stretching from Central Park to the Hudson River and the foothills of New Jersey, down to the Statue of Liberty, and around to the East River and beyond.
More:Central Park Tower To Become Tallest Residential Building in Western Hemisphere
"It’s extraordinary what you can see for miles and miles, and very dramatic to watch as the views change with the weather, season and time," she said. "It’s like witnessing a painting that changes every day, all day long."
But that thrilling view comes with a hefty price tag. Height is equated with value in certain global cities, including New York, experts say. Although the location of the building, amenities it offers and individual property’s views are more important than its overall height alone.
However, how much value each additional floor up towards the sky truly commands depends on a number of factors.
"Typically, you might say that each floor in any luxury building adds somewhere between $25,000 to $100,000 per floor in Manhattan," said Susan de França, the president and CEO of Douglas Elliman Development Marketing. But when there’s a view break, she said, meaning that the additional floor brings the owners’ view above a tree line or nearby building, "that price increase per floor could go up to a half-million-dollars."
Ms. Olshan agreed that the view break or reaching a height that affords owners the dramatic and panoramic views she mentioned above—only possible above the 60th floor in Midtown Manhattan or 30th floor (possibly lower) downtown and on the Westside—is where the real value comes into play. Above that height, though, she thinks the appeal of living on the 80th floor rather than the 75th floor, and paying a premium to do so, has little to do with views.
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"There’s a certain panache to being on a higher floor," Ms. Olshan said. It’s a status symbol, she added, and one that allows owners to "lose complete touch with the world, which some people like."
That is, of course, unless those extra few floors mean that the views will be protected into the future, she said. "There is a power and a huge equity value to that."
While supertall buildings have undoubtedly captured our attention, purely residential structures like this might be an "endangered species," said Ms. Olshan, citing zoning rules, a dwindling lack of desirable land plots in Manhattan, and the sheer expense and difficulty in constructing these buildings, making it nearly impossible for developers to complete and make a profit on, as reasons why.
It’s true that the structural requirements and building costs increase exponentially the higher up you go, said Jason Gabel, the communications manager at the Chicago-headquartered not-for-profit Council on Tall Buildings and Urban Habitat, which conducts and shares research on tall buildings. "This is why we haven’t seen a megatall (meaning 600 meter, or 1,9658 foot) residential building yet anywhere in the world," he said. "For feasibility and cost, it just doesn’t make sense."
Which is why the future of the supertalls likely means more mixed use structures, with some—but not all—residential units, he said.
"Mixed use is a way that developers can hedge their bets amidst economic uncertainty," Mr. Gabel said, listing the iconic John Hancock building in Chicago, the new ONE57 structure in Midtown Manhattan, and the record-breaking Burj Khalifa skyscraper in Dubai as examples of this building type.
One of these to watch? Saudi Arabia’s 1 kilometer, or 3,281-foot-tall, mixed use, spiraling skyscraper, named the Jeddah Tower, which is set to be completed in 2019. "That one," Ms. de Franca said, "will shatter any height records that exist now."
Here’s a look at other news from around the world compiled by Mansion Global:
Amid supply shortage, U.K. housing prices hit their highest point in months
In spite of slowed demand after the Brexit vote to leave the European Union, U.K. housing prices have hit a five-month high in August, bolstered by a lack of available supply on the market. Prices were up 0.6% from July, and 5.6 percent from the previous year, bringing the average home price to £206,145 ($270,000), per new data from the Nationwide Building Society. The company’s chief economist called the numbers "at odds" with the general real estate downturn, but added, "The decline in demand appears to have been matched by weakness on the supply side of the market." [Bloomberg]
Wealthy Australian developer is offering a leg-up to first-time buyers
First-time home buyers will be offered numerous incentives to purchase property in Vue, a new development on Australia’s Central Coast, backed by multimillionaire Tony Denny. "We’ve all been there, we’ve all struggled to get into the market as a first home buyer," Mr. Denny said of the project, which is in the same town where he founded the Gosford Classic Car Museum. Incentives include a decreased down payment requirement and a Australian $10,000 (US$7,542) cash or furniture offering. Combined with government property grants and stamp tax exemptions, this is expected to save first-time buyers in the development around A$36,000 (US$27,149). [news.com.au]
More:Hong Kong Luxury Market Rebounded Strongly in Second Quarter of 2016
Hong Kong housing prices to drop by another 10 percent, according to report
A new report from Nomura Holdings Inc. estimated that Hong Kong home prices are set to drop by another 10%, as more new developments hit the market, incomes stagnate and buyers worry about pending interest rate hikes. The company’s analyst Jeffrey Gao called a recent uptick in prices a break in a "multi-year correction," and also predicts a 5% drop in rental returns in retail property for 2017. "We are bearish on the physical property market, on a weakening economy, deteriorating affordability, declining retail sales and stagnant real household income growth," Mr. Gao added. [Bloomberg]
South Korea faces growing concerns over excess apartment stock
South Korean officials are warily trying to offset a possible housing crash while developers continue to add more new units to the market, taking advantage of low interest rates. Though the boom in building has in some ways helped South Korea’s economy, household debt is up, and combined with a slow job market, "aging population," and lack of foreign buyers, demand in many cities isn’t even close to the glut of supply on the market. "They are building way too much, it’s irresponsible," said one local broker in the city of Yongin, where there are currently 5,301 unsold new residential units on the market. "I can’t possibly recommend these new [apartments] to my customers when I’m sure they will lose money." [Reuters]
Chinese developers are transforming the real estate scene in Downtown L.A.
Tens of thousands of new apartments—and billions of dollars—are pouring into Downtown Los Angeles thanks, in large part, to an influx of interest from major Chinese developers, who see the area as a solid investment and a way to diversify their assets as the Chinese economy weakens. The current boom of mixed-use building in the area is "child’s play" for these large Chinese developers, as one local real estate attorney put it, though progress is slowed by the comparatively tough building regulations in the U.S., and local residents are concerned that the new buildings might sit empty. "When all these megaprojects are finished, they’re going to have to reshoot the postcard picture of downtown L.A.," said Mark Tarczynski, executive vice president for Colliers International’s L.A. office. [Los Angeles Times]
More:Chinese Cash Pours Into U.S. Real Estate
Goldman Sachs warns investors away from real estate stocks
While the market hasn’t soured, per se, investors can no longer expect double-digit returns, according to a new report from Goldman Sachs, which indicated that real estate stocks are growing riskier as an investment. Numbers are indeed trailing last year; so far in 2016, 122 funds have raised aggregate capital of $67.2 billion, while 2015 saw a total of 252 funds raising a total of $120.9 billion. Still, Andy Molan of London research firm Preqin says, "[It] is not all doom and gloom, there is still lots of opportunity, just that pricing is difficult and there is lots of competition for capital." [National Real Estate Investor]
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