Skyscrapers in Santiago: 300 meters of globalization agenda

Publication Date07 August 2017
DOIhttps://doi.org/10.1108/JPIF-05-2016-0032
Pages439-454
AuthorNestor Garza
SubjectProperty management & built environment,Real estate & property,Property valuation & finance
Skyscrapers in Santiago: 300
meters of globalization agenda
Nestor Garza
Universidad del Norte, Barranquilla, Colombia
Abstract
Purpose The purpose of this paper is to assess alternative economic explanations of buildingsheight in
Latin America and Chile, inductively producing a theory about skyscrapersheight in emerging countries.
In the quest for height, global exposure as advertising guides developers located in emerging economies,
while ego-building for investors.
Design/methodology/approach This paper uses mixed methods triangulation (MMT). Findings with
small sample econometrics for 38 cities from 13 different countries are re-interpreted by linguistically
analyzing 11 semi-structured interviews with local experts in Santiago.
Findings Globalization is the main determinant of skyscrapers height in the Latin American region, its
interaction with the need to portray management and technical skills of developer firms, determines a process
toward over-construction.
Research limitations/implications Because of small sample bias, the quantitative results are not fully
reliable, but this is precisely why it makes sense to use MMT.
Practical implications Santiago offers a valuable case study because, on the one hand, Chile was the
first Latin American country to undertake neoliberal type reforms, as early as 1973. On the other, the tallest
Latin American skyscraper is to be completed in this city by 2015. The theory developed, derived from the
evidence and the perceptions, has a Global South reach and can open-up an empirical research agenda.
Originality/value This paper innovates in real estate research by using MMT, not just to confirm
quantitative findings, but as an inductive theory building tool. It also analyses Latin America, a region with
scarce presence in the literature.
Keywords Latin America, Mixed methods, Chile, Global cities, Inductivism, Skyscrapers
Paper type Research paper
1. Introduction
High building construction has a symbolic value beyond its functional role as real estate,
challenging conventional economic analyses. However, and despite their evident presence in
citieslandscape, there is almost no economic research about skyscrapers. We consider this
lack of relevant examination a lost opportunity for urban research.
We analyze skyscrapers in Latin America, emphasizing the 2013 Torre Costanera in
Santiago de Chile, the tallest in the region. This case study has been selected not just for its
extreme height, but because Chile was the first Latin American country to undertake
neoliberal reforms (as early as the 1970s). Santiago and Torre Costanera offer an extreme
portrait of potential urban transformations in other Latin American cities, a place
where architecture and the economy collide(Cáceres, 2013).
We build upon theoretical and empirical contributions by Helsley and Strange (2008),
Barr et al. (2015), and Barr (2013, 2012). However, while following a purely formal economic
approach, none ofthese documents is about Latin America. Institutionalist interpretations by
Abadie and Dermisi(2008) and Titman and Twite(2013) are also conventional,in the sense of
providing a formal theoretical scheme and then proceeding to econometrically test it.
Our most immediate reference is Garza and Lizieri (2016) that uses a 12-year panel to find
determinants of buildingsheight in 29 cities from ten different Latin American countries.
Our paper uses mixed methods triangulation (MMT) (Downward and Mearman, 2007),
including quantitative information from 38 cities in 13 countries, and 11 interviews with
local actors in Santiago. Depictions about the development process of real estate products
oriented to global markets by Lizieri (2009) and Fainstein (1994) are contrasted with our
qualitative search of explanations. We hypothesize that recent tall buildings are
Journal of Property Investment
& Finance
Vol. 35 No. 5, 2017
pp. 439-454
© Emerald PublishingLimited
1463-578X
DOI 10.1108/JPIF-05-2016-0032
Received 19 May 2016
Revised 17 February 2017
Accepted 18 February 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1463-578X.htm
439
Skyscrapers in
Santiago
international advertising of the technological and organizational capabilities of architecture
and engineering firms located in emerging countries, as much as they are displays of power
for their investors.
The use of MMT is conducive to a quantitative analysis of the proposed hypothesis,
using information about the nationality of developers (architect/engineer). This is an
innovative approach in real estate research, as we transcend the qualitative checking of
quantitative results or the determination of survey questions (Di Ciommo and Lucas, 2014;
Poon, 2014), but use qualitative analysis as a theory building tool (Olsen, 2004).
This paper is structured in six sections. The first section is Introduction. Section 2
presents the theories under inquiry, while Section 3 presents the case study and the
available information for the quantitative and qualitative analyses. The MMT is explained
and applied in Section 4. In Section 5, we inductively produce a theoretical explanation of
our own regarding extra height of buildings in developing countriescities, present its
corresponding quantitative testing. The conclusions are in Section 6.
2. Contending theories
2.1 Traditional theory
Traditional urban land rent models have been updated by authors like Brueckner (1987),
Anas et al. (1998), and Kraus (2007), where rent increasing (economic size) and decreasing
(geographical area) forces interact. These forces cause factor substitution, and higher structural
densities are required in economically successful and geograp hically crowded urban areas.
This theory requires clearly detectable spatial differential rents in order to explain top
buildings height. Ingram (1998) and Aguilar et al. (2003) have found evidence of such a
structure in Latin American cities, also corresponding to the semi-concentric geographical
models of Ford (1996). Consequently, the tallest building in a Latin American city should
reflect the economic and geographic characteristics of its metropolitan environment
(Garza and Lizieri, 2016).
2.2 Decentralized metropolitan administrations
In the traditional urban land rent models, regulation diminishes potential height, increases
land prices and is inefficient (Carazo, 2011; Lauridsen et al., 2013). Its subtler effect would be
to incentivize extra heights in certain city sections, while decreasing it in the rest (Ding and
Zhao, 2013). In contrast, Engle et al. (1992) argue that restrictive regulation does not increase
land prices because of being supply-constraining, but because of being demand-enhancing.
Garza (2016) takes this idea a step further, with a Latin American city model where strong
regulatory standards are enforced in blue zones, where demand by global real estate
actors is feasible. That strategy has been used in Asian cities (Huang, 2004), where
peri-central locations with adequate cadastral structures can easily be adapted or cleared,
in order to accommodate high building districts with global standards (Olds, 1997; Olds and
Wai-Chung, 2004).
In addition to the above, when urbanized areas sprawl over extended metropolitan
regions, strategic planning is weakened. Smaller spatial government units struggle to
attract development resources while exploiting the agglomeration advantages of the entire
metropolitan area[1]. This political economy conundrum makes less clear the effect of
regulation on urban markets (Rodriguez-Acosta and Rosenbaum, 2005).
Consequently, we have three effects of urban regulation: a height decreasing effect of
built environment conservation policies, a spatially scattered height increasing effect of
providing city sections with global standards, and extended metropolitan areas with
decentralized planning authorities, where competition for development resources among
spatial units can incentivize extra height in certain city sections[2].
440
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