Super tall buildings, or skyscrapers, are being built at an astonishing rate. Ninety-seven buildings that exceed 200 meters (656 feet) high were constructed in 2014, setting a new record. The previous record was eighty-one buildings completed in 2011. The total number of skyscrapers in existence now is 935, a whopping 350 percent increase since the year 2000.
Another record set in 2014 was the completion of eleven super-tall skyscrapers of over 300 meters or nearly 1,000 feet. That is the distance in height of over three football fields. The tallest skyscraper completed in 2014 was One World Trade Center in New York City. It is the third tallest skyscraper in the world, and the tallest in the western hemisphere, but only if you count the antenna/spire in the building’s height.
The tallest skyscraper in the world is the Burj Khalifa in Dubai, United Arab Emirates. On July 21, 2007 it surpassed the height of the then-reigning record holder Taipei 101.
The Shanghai Tower, which is the tallest skyscraper in China, opens for business in mid-2015. The third tallest is the Makkah Royal Clock Tower in Saudi Arabia.
What is the Skyscraper Curse?
The reason all of this is important is the “skyscraper curse.” The curse is based on the correlation between the setting of new record heights in skyscrapers and the onset of economic crisis over the last century, or longer.
The last clear global signal of the curse was the Burj Khalifa, which saw the ruler of Dubai unable to repay the loans for all his elaborate real estate development projects. However, the Shard building in London set a new European record and ushered in the European economic and debt crisis.
Skyscraper Curse watchers have recently returned their attention to the Middle East. According to the Wall Street Journal Dubai’s real estate moguls have embarked on another “Go-Go Era” of boom and bust:
Dubai has slowly but surely clawed its way out of the hole it dug for itself in 2009 when a series of government-linked companies, including several under the direct control of ruler Sheikh Mohammed bin Rashid Al Maktoum, were unable to pay lenders on time and called for a standstill on repayments. The move signaled the death knell for an economic boom that had been fueled by real estate for almost a decade.
Dubai has again succeeded in convincing lenders — both international titans like HSBC and Standard Chartered and dozens of local banks — to support its government-linked real-estate developers. Investors, analysts and the emirate’s new crop of leaders all say this time is different to the previous boom running up to 2009.
Not only is the world teeming with real estate speculation and skyscraper building from China, to New York, to London, and the Middle East, there is a new world record setting skyscraper being constructed in Jeddah, Saudi Arabia. The Kingdom Tower is designed to be over one kilometer in height, or more than eleven football fields. It is to be completed in late 2016 or 2017. As designed, the Kingdom Tower will exceed the height of the Burj Khalifa by more than 500 feet. If events proceed as the skyscraper curse predicts, the beginning of construction of the Kingdom Tower signals a crisis alert (when a new record setter has begun) and will change to a crisis signal (when a new record is set) between now and the end of 2016.
Record-Setting Skyscrapers are Symptoms, Not Causes
Of course, the building of record-setting skyscrapers does not cause world economic crisis. The records are merely symptoms of the underlying cause of world economic bubbles: sustained artificially low interest rates by central banks. I explain the process and the theoretical connections between record-setting skyscrapers and world economic crises here in the Quarterly Journal of Austrian Economics.
The skyscrapers can sometimes tell us about the geography of world economic bubbles. The last bubble occurred in the oil rich Middle East and the next one would also seem to be in the Middle East. Both bubbles began when oil prices exceeded $100 a barrel.
It is interesting to note that Prince Alwaleed, the owner of the Kingdom Tower project recently and unexpectedly sold most of his large stake of stock in News Corp, Rupert Murdoch’s media conglomerate, to raise nearly $200 million. The move was said to have been part of an overall review and rebalancing of the Prince’s $20 billion portfolio. This is probably a smart move given the collapse of oil prices and the hefty price tag of $1.25 billion for the Prince’s Kingdom Tower.
