China’s Skyscrapers Boom

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source: Barclay’s skyscraper index report

Changsha China received nation-wide attention recently as it announced its plan to build Skyscraper City, which will be the world’s tallest building if it is built. are skyscraper projects signs of economic boom? Research suggests It might indicate the opposite of the boom, the crisis.

“The Skyscraper Index is a concept put forward in January 1999 by Andrew Lawrence, research director at Dresdner Kleinwort Wasserstein, which showed that the world’s tallest buildings have risen on the eve of economic downturns. Business cycles and skyscraper construction correlate in such a way that investment in skyscrapers peaks when cyclical growth is exhausted and the economy is ready for recession.” The buildings may actually be completed after the onset of the recession or later, when another business cycle pulls the economy up, or even cancelled. Unlike earlier instances of similar reasoning (“height is a barometer of boom”), Lawrence used skyscraper projects as a predictor of economic crisis, not boom (New York 1930; Chicago 1974; Kuala Lumpar 1997 and Dubai 2010).

According to Barclay’s Skyscraper Index Report,  “China will complete 53% of the 124 skyscrapers under construction over the next six years, expanding the number of skyscrapers in Chinese cities by a staggering 87%. China’s skyscrapers are not only increasing in number – it now has 75 completed skyscrapers above 240m in height – but the average height of the skyscrapers that it is building is also increasing as past liquidity fuels the construction boom. ”

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“In addition, to the increase in size and number of China’s skyscrapers, their geographic profile is also changing. Today over 70% of China’s skyscrapers are unsurprisingly clustered in the more economically advanced coastal areas of the Pearl River Delta and the Yangtze River Delta. Yet between now and 2017 over 50% of China’s skyscrapers will be built inland as China’s building boom moves from first-tier cities to second- and third-tier cities. Over 50% of China’s skyscrapers are today in tier 1 cities, and based upon current completion plans about 80% of China’s new skyscrapers will be built in tier 2 and 3 cities over the next six years – evidence of the expanding building bubble.”

The number of skyscrapers in Chinese cities

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photo credit: investinginchinesestocks

Well, when the whole country is enthusiastic about building the tallest skyscrapers in the world, skyscrapers index reminds us to cool down and maybe watch our economy.

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