The word ‘skyscraper’ often carries a connotation of pride and achievement. If you want to create an architectural expression for confidence and optimism in your nation’s fiscal future it appears the sky’s the limit. But as a warning from Barclays Capital suggests, building too many of them could be bad for a country’s economic health.
According to a study by the investment bank, the mania for skyscrapers over the last 140 years is a sure indicator of an imminent crash, and the next casualties of the tall-building boom may be China and India. It points out that the construction boom that threw up New York’s Chrysler and Empire State buildings preceded the New York crash of 1929 and Great Depression.
More recently, Dubai built a forest of skyscraping offices, hotels and apartment buildings, including the world’s tallest, the Burj Khalifa, before it got into terrible financial difficulties. In 2010 Dubai had to be bailed out by its neighbour, Abu Dhabi, to avoid going bankrupt.
Barclays Capital report said, “Thankfully for the world economy, there is not currently a skyscraper under construction that is planned to overtake the height of the Burj Khalifa.”
However, it said the “unhealthy correlation” between construction of the world’s tallest buildings and economic crashes was likely to ensnare China, which is home to half of the world’s skyscrapers currently under construction.
India, which has just two skyscrapers, sometimes defined as buildings over 240 metres (787ft) tall, is also on the radar after giving the go-ahead to its first skyscraper building boom, with 14 under way, including the world’s second-tallest tower in the financial capital, Mumbai.
Andrew Lawrence, director of property research at Barclays Capital in Hong Kong, said, “Building booms are a sign of excess credit.”
Lawrence said that historically, skyscraper construction had been characterised by bursts of sporadic, but intense activity that coincided with easy credit, rising land prices and excessive optimism, but often by the time the buildings were finished, the economy had slipped into recession.
We have an example of that currently rising over south London – The Shard building. Southwark Borough Council originally granted planning permission for this 310-metre tower in 2002. A year later, following a planning inquiry, Deputy Prime Minister John Prescott approved construction – the building industry and the UK economy was booming – what could possibly go wrong? Oh, dear….
In 2009, as the UK entered its second year of official recession, construction of the 82-floor Shard building finally began. Its scheduled completion is May this year, just in time for the London Olympics, when it will become a record breaker itself- the tallest building in the UK and Europe.
The word skyscraper was originally a nautical term that referred to the tall sails on a sailing ship. Let’s hope the good ship Shard has a strong mast and will sail through the current economic storm to calmer waters, and not get shipwrecked on the rock of recession.
Heather Campbell
Editor
