RESIDENTIAL SKYSCRAPERS AND ROOFTOP GARDENS: HOW DOES IT AFFECT FLOOR PREMIUMS?

Abstract

This is an empirical study on floor premiums of three attributes: floor level, rising building heights and the relocation of communal gardens. Floor level refers to the vertical location of the unit within a multi-storey residential development. An equal floor premium is typically used regardless of the exact vertical location of the unit. However, realistically, this practice is likely to be flawed. Building height refers to the vertical height of the residential development. The rise in building heights resulted in residential skyscrapers. Even though height is the main differentiating factor for residential skyscrapers, there is little study on how residential skyscrapers could alter floor premiums. In addition, introduction of rooftop gardens relocates the usual communal gardens from the ground level to the topmost level. Because this is a relatively novel idea for residential developments, its impact on floor premiums is unclear. A sample of condominium transactions was drawn from REALIS covering the period from 2002 to 2013 and the study found that (1) floor premiums are not constant across floor levels, but increase as floor level increases; (2) there is a non-skyscraper floor premium at floor levels below 25 and a skyscraper floor premium for floor levels above 25; and (3) a positive relationship exists for units located vertically nearer to the rooftop gardens, however, a negative relationship kicks in when the units become too close to the rooftop gardens. These findings will help developers to value the impact of heights and rooftop greenery on their developments. It spurs more future academia on the study of these vertical elements and house prices.