More rooms with a view.

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Living the High Life

Jonathan Miller writes about the housing economy and other aspects of real estate. He began a real estate blog, the Matrix, in 2005, and has written a column for Curbed.com. He is co-founder of Miller Samuel, a residential real estate appraisal company, and the commercial valuation firm Miller Cicero.
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Never have so many residential buildings had such lofty aspirations.

Based on the number of stories in buildings worldwide that are more than 650 feet (200 meters) high, we're in the midst of an edifice eruption. An even bigger surge is forecast for next year.

The interest in what might be called pinnaclenomics has been driven by capital seeking higher returns in hard assets like luxury real estate in the world's financial centers -- especially in developing nations.

This vertical building boom also can be traced to new techniques and materials that enable construction of much taller buildings on a smaller footprint. The post-financial crisis population shift to cities from suburbs also has helped stimulate demand for taller structures, since available land is limited.

Greater height brings better views and an altitude premium, giving developers an added incentive to aim high. A condo in One57 (1,005 feet) in Manhattan that closed last week was the first in the U.S. to crack the $100 million threshold.

One57 briefly held the title as the tallest mainly residential building in New York, but it has since been eclipsed by 432 Park Ave., which topped out at 1,396 feet.  These Manhattan developments will be overshadowed by the nearby Nordstrom Tower, which is expected to reach 1,775 feet. And just in the past few days, a developer across the Hudson River in New Jersey, said it will erect a 950-foot-tall residential tower.

However, according to the Council on Tall Buildings and Urban Habitat, all of them will be dwarfed by the Kingdom Tower in Jeddah, Saudi Arabia. This exercise in elevation will be 167 stories and 3,281 feet tall when finished, probably in 2017.

Although the Council’s rankings are based on the actual number of stories,  developers engage in floor inflation, since dwellings on higher floors bring higher prices. For instance, the penthouse that just sold at One57 occupies the 74th and 75th floors, but it was marketed as being on the 89th and 90th floors.

Although Manhattan is a locale where building taller often is the sole option, the city accounted for just 12 of the 445 residential towers built or under construction around the world in excess of 650 feet. The top three cities -- Dubai, Mumbai and Shenzen, China, respectively -- accounted for eight times that. China alone accounts for more than a quarter of tall residential developments worldwide.

Look for many more residential real-estate height records to be broken in the coming years -- mostly outside the U.S.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Jonathan J Miller at jmiller@millersamuel.com

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net