The Many Mysteries of Changsha’s 220-Storey, 270-Day Skyscraper

News this week that ground had been broken in Changsha for construction of the world’s tallest building brought media attention from around the world. And not all of the headlines were positive.

The decision by Changsha-based conglomerate Broad Sustainable Building to build the 838 metre tall Sky City tower in this 2nd tier city in China’s Hunan province was already enough to raise questions among real estate professionals. However, many other aspects of the project including the proposed schedule and the relative inexperience of the developer caused many observers to question the commercial, structural and chronological feasibilty of this new super-tall skyscraper scheme.

The skepticism is understandable in light of these ten facts surrounding the project.

1. With its height of 838 metres (220 floors) Sky City would be the tallest building in the world (10 metres taller than the current champ – Dubai’s Burj Khalifa and 206 metres taller than Shanghai Tower)
2. Current plans call for completion of the project within nine months – by April 2014. (Compared to a construction time of 5 years for the Burj Khalifa or a projected six years for the yet incomplete Shanghai Tower).
3. The original construction plan projected that the tower would be completed within 90 days
4. The structure will have total floor space of 1.2 million sqm
5. Sky City is planned to include housing for up to 17,000 people
6. The building plan includes a hotel accommodating 1000 guests, a hospital, five schools, and offices
7. The tower will include 17 helipads
8. The biggest development project in Broad Group’s portfolio to date is a 30-storey hotel
9. The developer is estimating construction cost per sqm for Sky City at $1500 (compared to a cost of $4500 per sqm for Burj Khalifa.
10. Total cost for the project is estimated to be US$626 million (compared to the Burj Khalifa’s $1.5 billion and the Shanghai Tower’s $2.2 billion).

Broad has something of a track record of using their modular building materials and techniques to achieve super-fast construction, having completed their 30-storey hotel project in only 15 days and a three-storey building in only nine days. Broad chairman, Zhang Yue confirmed in an announcement at the groundbreaking on Saturday that his company plans to complete Sky City in April 2014.

The proposed schedule for the project, and the ability of an inexperienced company such as Broad to tackle the many challenges involved in such a super-tall building have led many observers to predict major struggles for the project.

However, as Mingtiandi is not expert on construction technology or project management, it may be best to simply look into the real estate economics of the project.

If You Build It, Will They Come?

One of the big questions to answer about Sky City is who wants 1.2 million square metres of space in the middle of a Hunan rice field?

While Broad Group has secured 67,000 sqm of land for the project, a look at the above photo of the site from last year shows that there is no infrastructure or other commercial activity in the area.

If, as the developer claims, the objective of Sky City is create a wholly self-contained city, then it will be likely to face the same challenges that any other urban development project wold face if based far away for current centres of social and economic activity.

With regard to commerce, according to Broad, three percent of the space will be allotted for office space, which means 36,000 sqm of offices – not a huge amount of space in China. However, if one calculates that the average office for a large company in an emerging city such as Changsha is likely to require only 200 sqm of space, then the developers will have to convince 180 companies to shift their offices to this agrarian location.

Given the small amount of the project devoted to commercial development, the rationale behind the hotel portion of the project also seems questionable. With180 companies in the building, and 1000 hotel rooms, there appears to be something of an inbalanced ratio of hotel rooms to companies.

Unless, hotel guests are expected to commute from Sky City to downtown Changsha, the hotel rooms would need to be filled with guests from companies with offices in the tower, which would mean each company in the building would need to have 5.5 clients, vendors or employees staying at the hotel every day.

Why Changsha?

The economic need for a super-tall building in Changsha also can be called into question. While the city has received considerable attention in the past few years as an emerging centre in China, its economy clearly is not ready to support the tallest building in the world. Consider a few of Changsha’s basic economic indicators (courtesy of Wikipedia):

• GDP in 2011: RMB 561.93 billion (compared to Shanghai’s RMB 1.92 trillion)
• Population: 7.1 million
• Metro Lines: First metro line planned to open in 2015
• FDI (2011): US$2.6 billion (compared to Shanghai’s $12.6 billion)

In the absence of clear economic demand for this project, its helpful to look at some of the political elements driving the choice of Changsha as a location.

It’s very possible that the reason this project is going up in Changsha is that it may be the only city in China with the combination of ambition, and willingness to risk being recognised as a global centre for folly, to take on such a bold proposal.

As Broad is based in the city and has previously completed projects (albeit much smaller ones) in the area, they are more likely to find believers in the Changsha government than they would in other emerging cities in China such as Shenzhen, Chengdu or Dalian, which have broader economic bases and would be better able to sustain a project such as Sky City. However, its likely that none of these cities wanted to take on a project as over-reaching as Sky City.

In China’s leading cities, such as Shanghai or Beijing, a company with a minimal track record such as Broad is unlikely to get approval for such an ambitious project. Local governments in these cities recognise the cost of installing infrastructure to support massive construction projects, as well as the loss of public support (not to mention public ridicule) that would come with the failure of such a high profile project.

One benefit of the aggressive schedule for Sky City, however, is that we will be able to find out whether the developer’s projections are fact or folly, within only nine months.

In the meantime, enjoy this very cool time lapse of Broad Group’s 30-storey hotel going up near Hunan’s Dongting Lake.

I will be sure to keep you updated on any progress on Sky City, whether it be informative, entertaining or otherwise.