Chinese builders may have celebrated the topping out of the world’s second tallest skyscraper, but if history is anything to go by, the vision that spurred developers to reach for the sky will soon give way to economic gloom.
The Skyscraper Index has tracked the world’s tallest buildings for around 150 years and shows that recession and downturns shadow the glory times when countries pour money into building.
Construction has just finished on the Shanghai Tower, standing at 632 metres; the skyscraper is dwarfed by the world’s tallest building, the 828 metre Burj Khalifa tower in Dubai, United Arab Emirates.
Chinese builders have already started no the foundations for the next massive tower, Sky City, which will edge 10 metres higher than Burj Khalifa at 838 metres.
But bad news is just around the corner, according to the infamous index.
“The opening of each new world’s tallest building for the past century has signalled the start of an economic downturn and there is no tangible reason why China should be any different,” said Andrew Lawrence, the property researcher behind the index.
So how do skyscrapers and economic downturns relate? Here are some examples:
- 1929 – Five days after the spire was fastened atop the Chrysler Building in New York, the Wall Street Crash hit the US and led to the Great Depression
- 1996 – The Petronas Towers, Kuala Lumpar, Malaysia were completed – followed 16 months later by financial crisis that wiped 50% off the value of the nation’s stock exchange
- 2009 – The Burj Khalifa was finished and just two months later Dubai was plunged into a debt crisis
Similar problems beset economies when the Empire State Building, New York, was topped out; the downturn following the completion of the first World Trade Center in New York and Taipai 101 in Taiwan.
Pride before a fall
Lawrence believes two reasons lead to economic crisis when a nation decides to build the world’s tallest building.
First, the concept is designed as a badge of power to show how rich and advanced that nation has become
Second, only nations with cash can afford such buildings and often that cash comes from borrowing as the economy prospers.
Already, the Chinese powerhouse of an economy is slowing. Growth is still a significant 7.5%, but way behind the double-digit expansion each year for the past 30 years.
“They say pride comes before a fall and skyscrapers are an expression of a proud country,” said Lawrence. “China wants to show the world that they are rich and powerful, but the markets are concerned that’s not the case and that the boom is masking reality that may haunt the economy.”