Why buildings are in hong kong are so tall?

Answer 1

There is always a fixed amount of limited land available and it is impossible for all firms to be located in the optimal position. The only way to accommodate all firms is to substitute capital for land.

Let us first start with some fixed costs. With a small land size of 0.04 hectares, the capital cost would be $250. On the contrary, another building would have a larger land size of 1.0 hectares and capital cost of only $50.

When land rent and building cost is low at $40, the total cost of constructing a tall building would be 0.4(40) +250= $251.6. This is due to its high capital cost. However, for a short building, the total cost would only be a mere $90.

We can clearly see that for a short building, total cost is minimised. When land is cheap, it would make more sense to substitute more land for capital. The savings from using less land are dominated by the higher capital costs of a taller building. Thus, the better option, in low rent, is to consume more land for short buildings.

In areas with high rent, building cost and land rent would be $1,600. The total cost of a tall building would only equivalent to $314. This is because a smaller land size would amount for a lower land cost. On the other hand, if a firm were to construct a short building with larger land size, the total cost would be $1,650.

The total amount for a short building is significantly higher than the total cost of a tall, but small land-sized building. When land is expensive, the savings in land costs from using less land are greatly substantial. Capital should be substituted for land. Therefore, it would appear wiser to construct taller buildings when the land rent is prominently higher.

The model exemplified with 0.04 hectares and high rent is, in fact, a representation of a typical plot of land in the CBD. It depicts the situation of high capital cost, high land rent and small land size. Thus, through this example by Sullivan, the concept of factor substitution is addressed. It would seem that with high land rent and building costs, total cost is minimised through constructing tall buildings. Firms optimise by substituting capital for land, as rental prices rise. As such, the structures in CBD areas often consist of numerous skyscrapers on small lots.

Answer 2

Ascending for distant look is people's common desire therefore peoplr tend to build such a tall buildings

Answer 3

China has a high population so they need larger buildings for space.