It's a combination of things. As a general rule the land cost - on the net sellable space (condo sf), should be around 10% or less. The low-rise product has lower land costs AND lower construction costs. In Austin, low-rise construction is about $110-120 PSF, while High-rise is $180-$200 PSF.
It's the "density" that determines what effect the land cost has on a development. If the FAR (Floor-Area-Ratio) of these low-rises is 3, they'd get 3 sellable SF for each SF of land. Therefore, if the land cost is $40 PSF, after the FAR the per-unit cost (sellable condo SF) would be about $13 PSF, plus interest, a total of $15. For a high-rise development the land may cost $100 PSF, but with a FAR of 8-10, the per-unit cost (condo SF) of the land would be similar. I recall Novares total land cost to be about $100 PSF, which equated to $15-20 PSF on the per-unit cost (condo SF).
I've rarely seen the land costs, even on projects in major cities with higher land costs, exceed 10-15% of the costs of the finished product - the
sellable condo space.
It's not the LAND. 
The difficulty in high-rise development is hardly ever the land costs - they are minimal compared to the total
construction and
soft costs (design, finance and marketing).
So, when someone (especially a dumb reporter) says the "land costs are driving up the prices of luxury condos"... simply roll your eyes. Land cost drives the density, not the price of the units. The land is only worth the density it achieves. Construction costs and the construction interest (how long construction lasts and how long you have to carry the project) is a much bigger problem. Construction costs have stalled most projects - they've risen 20-40% in the last year.
Typical high-rise condo costs (on net sellable SF):
1. Land
Land Cost - $15.00
Land Interest - $5.00 (3 years)
LAND TOTAL: $20.00 PSF
2. Hard Costs
Res Const. - $200.00
Parking Const. - $50.00
HARD COST TOTAL: $250.00 PSF
3. Soft Costs
Design - $10.00
Const. Interest $20.00
Marketing - $10.00
SOFT COST TOTAL: $40.00 PSF
TOTAL DEVELOPED COST: $310 PSF (Break-even)
*Net sellable is generally 80-90% of the total residential construction. This is why the above numbers seem a bit higher than construction estimates. They can't sell all the SF they build, but they still have to pay for it.
Novare must get $310 PSF in average prices for the 360 - just to break even. This means a typical 1,000 SF unit will start at $315,000 on the lowest floor. Of course, this is contrary to their stated objective of "affordable luxury" with units starting in the 190s - unless they are willing to lose money on the lower floors and make it up on the higher floors - a possible form of "subsidized housing."
I would guess that the risk in the Novare deal would require a 20-30% return to the equtiy investors. Assuming they put up $30 million to satisfy lenders, they'd require a return of at least $20 million (over 3 years). This would raise the Novare break even to the $330 PSF on condos. Therefore, the total prices Novare must achieve would be +$350 PSF or more ($300 PSF on lower floors to $500 PSF on upper floors).
When you do the math on Novare, Spring, T. Stacy, 200 Congress and the Hyatt Condos - it just doesn't make economic sense. Austin does not have a ready supply of buyers for $400-500 PSF luxury condos (Stacy and 200 Congress have even said some of their units would be $600-700 PSF). This isn't NYC or even Dallas. Dallas has trouble selling 500 units a year in this price range.
I think we'll keep seeing many low-rise condo deals before we see any luxury high-rise deals breaking ground (Hot SoCo).
Some will try to fool people (Milago did) by selling a cheap apartment as a luxury condo. But, even there the prices didn't exceed $300 PSF and probably averaged around $270 PSF.
Hopefully, the "W" on Block 21 will help change the dynamics. Look for pre-sales this Summer. Novare, Spring and even Tom Stacy look like the numbers won't work (Pelli or not). They can't afford to build them at prices the market can absorb. The "W" is a valuable, established brand that allows for $500 PSF prices.
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