Are the emerging markets obsessed with skyscrapers?

In the past 15 years, nearly 190 skyscrapers have been built in Dubai; comparatively, London has seen the construction 23 new skyscrapers in the same time frame, according to Knight Frank.

By the end of next year, there will be around 800 buildings above 152 meters tall completed in China, while FMG estimates the country will build enough skyscrapers by 2025 to fill 10 cities the size of New York. Furthermore, data from the Skyscraper Center reveals Jakarta now boasts over 160 buildings taller than 100 meters and, only last month, a deal was confirmed to build the world’s tallest tower in Saudi Arabia.

The question is, why are the emerging markets encouraging so many high-rise construction projects?

Knight Frank’s Skyscrapers 2015 report refers to skyscrapers as “the optimum means of addressing major economic and geographic challenges facing cities today”. Many cities in the emerging markets are experiencing rapid development, in terms of economic, industrial and population growth, and infrastructural improvements.

Many of the bigger cities in these developing countries – such as Jakarta, Metro Manila, Mexico City and Colombo – are experiencing rapid urbanization. This, coupled with extreme population growth, is resulting in a major gap between the supply and demand of residential real estate and commercial units. As the number of people living in cities grows, the amount of available land is decreasing, and prices are consequently rising.

Paul Philipp Hermann, co-founder and managing director of emerging markets-focused real estate platform Lamudi Global, comments:

“Skyscrapers are increasingly popular in the emerging markets, not just for house-hunters looking for residential housing, but for real estate investors too. These developments address the issue of land shortages, overcrowding, supply versus demand, and lacking business space, all in one building.

Skyscrapers offer cities a solution to delivering housing, office units, and even retail space all in one building. Furthermore, as urban living becomes increasingly popular, industry professionals are recognizing a desire for workers to live nearer to their place of employment. By creating more residential spaces in close proximity to offices, skyscrapers are cutting commuting times, and improving quality of life for many.

“Not only are more people moving into emerging cities, so are businesses. More companies than ever are operating worldwide, leading to increased demand for office units. As a result, we are seeing a rise in mixed-use developments. Skyscrapers provide the perfect solution for these large-scale projects, which require a large amount of space in cities that do not necessarily have much land available.”