Assessment of the most reasonable number of storeys in modern office buildings

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.