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Supertall Buildings - Risk Bulletin

With values often exceeding US$1 billion, the latest supertall or megatall building projects pose new challenges for insurers, as well as for architects and contractors.

 

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Executive Summary

Tall buildings are becoming taller and being built faster than ever before, driven by rapid growth in Asia and the Middle East. The number of supertall buildings (300m+) (101) in the world has almost tripled in the last seven years. Just 15 were built between 1930 and 1995.

More than half of the world’s 100 tallest buildings have been built in the past four years alone (59) - 90% in China, SE Asia or the Middle East. This “construction
shift east” will continue, driven by investor appetite, increasing populations and lower labour costs. Half of the 20 tallest buildings in the world in 2020 are expected to be in China alone.

US skyscraper dominance is declining. In 1930 99% of the tallest 100 buildings were located in North America with 51% in New York. Today, this has declined to just 16%. South East Asia (48%) and the Middle East (30%) are home to more than three quarters of the tallest 100 buildings. Europe, South America and Africa account for just 2%. China has the most tall buildings in the top 100 (30) across more than 15 cities, double North America.

Dubai is home to 20% of the tallest 50 buildings. The average height of the world’s tallest 100 buildings today (358m) has increased by 25% since the start of
this century* and will increase further in future. The average height of the tallest 20 buildings in the world in 2020 is expected to be close to 600m. When the Kingdom Tower development (1km) is completed in 2019 it will mean the height of the world’s tallest building will have doubled in 10 years.

The shift east is allowing for more growth. Between 1901 and 1998 all of the buildings to have held the title of “world’s tallest” (9) were in the US. Their height
increased by 275m during this period. Over the past 16 years the world’s tallest buildings (3) have been in Asia/Middle East with a 386m height increase.

How high in the sky can they go? A realistic achievable height with current technology is one mile (1.6km), although this is not expected for another 20 to 30 years.

Outside of planning restrictions, limiting factors are efficiency and speed of elevators, new building materials to potentially replace steel and concrete, safety measures and damping systems. Cost is the major obstacle preventing developers going much beyond the one-mile mark - at least not in the next few decades. Buildings like Kingdom Tower will remain the exception rather than the rule.

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Nineteen of the world’s tallest 100 buildings are in Dubai including the current number one, the Burj Khalifa.

Increasingly complex high-rise building projects present significant risk challenges meaning insurance claims and risk consulting services are particularly important on a construction site.

Impact of any seismic or natural catastrophe activity – in particular flooding during the construction stage; the threat posed by wind loads and fire; choice of building
materials, and the unique complexity of managing projects that can involve as many as 10,000 workers and over 100 subcontractors represent the key risk
challenges.

Some significant technical issues including pumping and placing concrete at extreme heights; cranage and lifting items to such heights; and significant variation in wind speeds between ground level and higher levels – this affects design and construction works.

In addition, maintaining verticality as the building height increases; elastic shortening of constructed building elements as the imposed weight from the completed building increases; maintenance and repairs of inside and external elements; and building services provisions – electrical, water and sewer disposal.

The insured values involved with supertall buildings are increasing with insurance playing a vital role in ensuring such projects advance past the design stage. Today’s newest and largest buildings easily exceed $1bn or more in value. AGCS is the leading reinsurer for the construction of the next building that will hold the title of “world’s tallest” - the Kingdom Tower (see right) which has a total insured value of US$1.5bn.

For insurers each project must be planned and assessed on its own merits and specific risks. Timelines may extend, design plans may alter and engineering challenges may arise. Regular sharing of accurate management information to all stakeholders is crucial. Close evaluation of past claims is essential in preventing
future claims.

New risk challenges continue to emerge post-construction as demonstrated by increasing concerns over the potential impact of glass facades on the surrounding locality. Unexpected consequences of building so high with such materials highlights the need for ongoing risk mitigation.

Appropriate insurance coverage is a key part of any holistic risk management strategy. As well as providing all risks building and construction protection, insurers such as AGCS also provide after construction coverage, protecting policyholders against physical structural damages arising from defects in design, materials or workmanship.

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* 286m average height in 2000 - CTBUH Journal 2008 Issue II