Floating Cities: The Next Big Real Estate Boom
"I’m a real estate developer and this is a developer’s dream,” spoke Lela Goren, a NYC-based developer and investor during a UN Habitat event as she looked over a scale model of Oceanix City—a floating city concept that could be deployed around the world. In this era where the value of and need for coastal property throughout Asia is so high that dozens of countries are creating hundreds of square kilometers of artificial land for urban development, her words resonated throughout the room. Not only may floating cities be a salve to help to mitigate the impacts of rising sea levels, but also a way for governments and developers to create vast swaths of much-coveted space for highly profitable coastal development by building out into the sea in a more environmentally sustainable way than land reclamation.
“Most cities are located nearby water and this number will also increase in the next decades,” said Kees-Jan Bandt, the CEO of Bandt Management & Consultancy. “This was already the case a hundred years ago: water is life and always has been a center of economic activities.”
For this reason, coastal cities have been drawing people towards them at an ever-increasing rate. Nearly three million people move from the countryside into cities each week, with the bulk of this migration heading to coastal cities, which now contain over half of the world’s population and are, quite literally, bursting at the seams. This is a situation that is expected to only grow more dire, as UN Habitat predicts that by 2035 90% of all mega-cities—metropolises with over 10 million people—will be on the coast.
Over the past decades, coastal cities across Asia have been responding to the need for more land by simply making it themselves. Land reclamation—dumping or corralling sand in aquatic areas to create new land—has grown to bonanza-like proportions, as Asian cities build arrays of high-value housing, luxury shopping malls, entertainment facilities, transportation infrastructure, and even entirely new cities where there was only open water not long ago. From 2006 to 2010, China was tacking on an additional 700 square kilometers of new land each year. Malaysia is engaged in mass reclamation work for the 700,000-person Forest City project as well as a slew of luxury developments in Penang and Melaka. Sri Lanka’s capital of Colombo reclaimed enough land to build an entirely new financial district that’s meant to rival Singapore. South Korea built the Songdo “smart city” entirely on land expropriated from a bay. Dubai has turned reclamation into an art. While upwards of 20% of Tokyo and nearly 25% of Singapore is on land that nature didn’t make.
“In some Asian countries it is sometimes easier, quicker, and, on the long-term, cheaper to reclaim land from the sea than develop on existing land because of land ownership,” Bandt explained.
In already crowded coastal cities, large swaths of development land are rare, and the procurement of such often requires costly and complicated evictions and relocations. So land reclamation was often seen as a win-win for developers and municipal planning boards: they could get fresh, barren land in high-value, central locations without needing to deal with the trouble of land owners or tearing down already built-up areas. Also, in most countries, reclamation is a land rights wild card, as there are no existing statutes on the ownership of land created on the sea—it’s a simple matter of makers-keepers. And the profits from land reclamation? According to Ocean University of China professor Liu Hongbin, land reclamation in China could produce a 10- to 100-fold profit.
Profits 10-100 fold
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