ASSESSMENT OF THE MOST REASONABLE NUMBER OF STOREYS IN MODERN OFFICE BUILDINGS

Abstract

Nowadays in Russia a great number of commercial real estate including multistoreyed office
buildings have been built. Quite often implemented investment projects are unprofitable due to incorrect
forecasting of the rental rate, unaccounted expenditures, volatile economic environment and
the increased number of storeys. As a consequence the objects are becoming unclaimed and unprofitable,
the owner has financial losses and sometimes has to change the function of the building or to
find new ways of income generation from the property built to return expenses spent on the implementation
of the project and to get partial target profit.
To avoid implementation of unprofitable projects it is necessary to calculate economic efficiency
of the construction taking into account real market environment and to follow these calculations
while assessing the number of storeys in a building.
Special effect on the factors of efficiency of investment project is made by discounting as this
operation depreciates money flows in future.
The article highlights basic elements of investment project for the office building construction
influenced by the number of storeys in a building. As a basic efficiency criterion net present value
indicator is taken (net present value, NPV).The article shows economic and mathematical model of assessing the most reasonable number
of storeys in an office building. The most reasonable number of storeys and net present value of the
project for office buildings in large cities of Russia are calculated. As a result it is found that at
present the construction of high-rise buildings is justified only in Moscow.
Keywords: multistoreyed office buildings, assessment of investment projects, urban planning.