While the world screams "recession", inflation spirals out of control and property markets fall into a slump the world over, some of the most ambitious construction projects are underway in some of the biggest cities in the world. Some label these projects foolhardy, and believe that they are destined to fail, or at the very least be completed years beyond the projected deadlines at billions of dollars over budget. Others believe that there projects foretell of rising confidence in the property market over all, and are indicative of a firm belief in consumer confidence.
In an article for The Wall Street Journal Online, Alex Frangos, looks at some of these large-scale projects and the implications for the world at large, as well as the companies directly involved in the endeavors. The five biggest construction projects are planned for New York City, London, Milan, South Korea and Los Angeles and cost a total of $64.8 billion (32.63 billion or R490.8 billion).
The cheapest of the projects is Garden Avenue in LA, at $3 billion. It is intended to revitalise the flagging downtown area and includes a 16-acre park, residences and a hotel. Phase one of the project is expected to be completed in 2011. Next is Porta Nuova in Milan at $3.6 billion. The "New Gate" will be built in the vicinity of the Garibaldi Train Station. The project was designed by 25 architects and will include a cultural centre, park, offices, homes and stores. Completion is planned for 2012.
Stratford City in London will cost an estimated $7.9 billion. It was initially planned for the 2012 Olympics, but completion of all the phases is only expected in 2020. It will consist of 180 acres, of which 5 million square feet will be devoted to offices; there will also be space for 5,000 residences. Hudson Yards in New York City is designed to optimize the limited space within the city by building a platform over the trains on the Hudson River. The platform will occupy 45 million square feet and will be devoted to office space, residential towers and a 'green space', presumably so that people don't go insane surrounded by all that concrete. The project is estimated to cost $20 billion and is expected to be finished in 2020.
The most ambitious project, Songdo City in South Korea, has been under construction since 2005 and is expected to be completed in 2014. 1,500 acres of land near the Incheon International Airport will be built into the first city in the world dedicated to being an International Business District. It is expected to house 300,000 workers, 65,000 residents and is budgeted at $30 billion.
One of the reasons for the skepticism surrounding these projects is that banks are cutting back on commercial real-estate loans, which means that capital-rich large-scale projects will struggle to find the cash to keep construction going. But most companies that tender for mega-projects such as these are well-aware of the inherent risks, and are willing to go forward anyway, because if they are successful, their reputations within the construction industry will be made.
In a time when many construction projects are being abandoned due to floundering economies and various belt-tightening initiatives, it's comforting to know that there are still people out there who are willing to stake billions of dollars on the hopes of an economic upturn. Perhaps the property market isn't in such dire straits after all.
Recommended site:
http://www.realestatejournal.com/buysell/markettrends/20071227-frangos.html
Sandra wrote this article for the online marketers Trafalgar property managers leading specialists in property management, residential letting and property insurance.
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