The tower will be approximately 270m tall and Otis expects it to be the tallest above-ground test tower in the world. The new facilities are scheduled to be operational by the end of 2018.
The test tower and R&D facility will support development of new technologies for use in elevators with the aim of delivering higher efficiency and smaller footprints, as well as safety, comfort and convenience for passengers.
The tower design uses a flexible configuration that can be adapted to test new components and systems as they evolve.
"Building our new test tower and R&D Center in Shanghai underscores our continuous commitment to satisfy customers in China and around the world," said Otis president Philippe Delpech.
The new facility will be part of a network of research facilities and test towers in four continents.