1 Economic Life of Buildings in a Large City Tzu-Chin Lin National Chengchi University, TAIWAN ERES Eindhoven 18 June 2011

2 Outlines Taipei- Taller, Faster Supply of New Space Economic Life of Buildings and Land Recycling Concluding Remarks

3 Taller and Faster City - where economic activities, trading and manufacturing, take place - urban growth constrained by durable physical fabric but frequently ignored in theories - it matters if buildings are able to supply in response to the changing demand

4 Taipei millions km2 - 9,593 / km2 Taiwan - 23 millions - 35,759 km2 - 69% mountains

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6 6 “Snail without Shell” demonstration in 1989 and 2010

7 Potential harms to a city if the housing supply is falling behind demand (Glaeser 2006) - worsening housing affordability - declining population - greater housing price volatility - shrinking employment and income - less diverse demographic mix (a small elite group) - Manhattan as an example Is Taipei moving towards that direction?

8 Supply of New Space Housing Price, New Floor Spaces, and Household Units over Time

9 Through years 2001 to 2009 Chang et al. (2009) - Taipei housing price has been overvalued by 38% (price/income) and 27% (price/rent) housing price has more than doubled - but accumulated inflows of floor spaces have only reached 20% - the new households continue to form up to the present - an inelastic housing supply is suggested Data Analyzed - official record of permits to demolish and to construct - between Jan 2001 and Sept 2009

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11 Districts total Shilin Datong Daan Zhongshan Zhongzheng Neihu Wenshan Beitou Songshan Xinyi Nangang Wanhua Total Annual Net Additions of Floor Spaces across Districts ( m 2 )

12 New Additions of Floor Spaces over Locations Distribution of Assessed Land Values across Taipei City in Year 2010

13 locations of demolished buildings Economic Life of Buildings and Recycling of Land

14 Building Teardowns and Construction over years Districts Accumulated new development projects (A) Redevelopment on the same sites (B) Projects built on the same sites (B/A) in percentage Average years between knockdowns and development Shilin Datong Daan Zhongshan Zhongzheng Neihu Wenshan Beitou Songshan Xinyi Nangang Wanhua Total/average

15 Location of demolished buildings Datong and Wanhua - old neighborhoods - aged buildings Zhongzheng and Daan - pricey neighborhoods - most desirable residential areas Driving forces behind building demolition - physical deterioration - economic demand

16 Ages< Total Concrete Reinforc ed-brick Brick Wood Total Age Distribution of 692 Demolished Buildings

17 Structure materials Annual depreciation (%) Physical life (years) Salvage value (%) Concrete1%6040% Reinforced brick1.2%5237.6% Brick1.4%4635.6% Wood2%3530% Law-specified Annual Depreciation, Physical Life and Salvage Value

18 overall - the majority of buildings were torn down at the age of between 26 to 45 - one-fifth of the buildings were even less than 25 years old concrete buildings - none reached their physical end - 40% did not even reach half of their physical life - waste of resources and disjoint between urban plan and market reality brick and wooden buildings - a respective 19% and 29% of them have passed physical end when torn down - redevelopment did not move as smoothly as hoped - obstacle to urban regeneration

19 Concluding Remarks The majority of new buildings occur in the outer areas on raw land Areas of high-end markets also have seen a modest new supply through recycling of land Few new spaces are supplied to the inner-city deteriorating areas where redevelopment is in urgent needs

20 Both physical and economic factors are operating at determining the life of a building Discrepancy between physical and economic life of buildings suggests a potential inefficiency of land use

21 Thank You for Your Attention!