Will 2016 Be The End Of The Current Skyscraper Boom?

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Submitted by Mark Thornton via The Mises Institute,

With more financing in place, the world’s tallest skyscraper is moving forward.

Recent media reports indicate that the final segment of financing has been obtained for the $1.2 billion Jeddah Tower project in Saudi Arabia. This is the financing that would be necessary to bring the project to record heights. Media reports also show that the structure has risen to more than seventy-five meters (246 feet) and construction is proceeding at an uninterrupted pace.

Above ground construction on the long delayed Jeddah Tower started in September 2014, but there was considerable doubt that the financing of the one kilometer (3,280.84 feet) tower could be obtained, given the shaky financial conditions in Saudi Arabia.

But the Jeddah Tower is only the latest phase in an enormous boom that began setting new records in 2014. As I reported nearly a year ago:

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.

If completed as planned, the Jeddah Tower will be the tallest in the world. The International Business Times reports:

Saudi Arabia’s Kingdom Tower in Jeddah is slated to become the world’s highest skyscraper when it is erected in 2020, knocking Dubai’s Burj Khalifa tower from its perch as tallest building at 2,716 feet. The new tower will claim the title if it reaches its planned height of 3,280 feet. …The 200-floor Kingdom Tower will be part of a reported $8.4 billion project to construct Jeddah City. Construction of the skyscraper will entail 5.7 million square feet of concrete and 80,000 tons of steel …

Time for a Skyscraper Alert?

In other words, the Tower is just part of an even more massive project, and it’s time for a new skyscraper alert.

A skyscraper alert is a market indicator suggesting a significant economic crisis in the near future. This alert could have been issued earlier because the alert is based on the ground breaking ceremonies of a world record setting skyscraper, not the initial announcement of the project which occurred in August of 2011.

The completion of record-setting skyscrapers has long seemed to indicate the beginning of economic crises.

The Singer Building (September 1906) and Metropolitan Life Insurance Building (1907) began construction before the Panic of 1907 and were later completed in 1908 and 1909, respectively.

Construction began on 40 Wall Street (now the Trump Building), Chrysler Building, and the Empire State Building all prior to the crash on Wall Street which began in the fall of 1929 only to have the record-setting buildings open in the beginning of the Great Depression in 1929, 1930, and 1931, respectively.

Construction of the World Trade Center towers began in August 1968 and January 1969 and opened in December 1970 and January 1972, respectively. The economy was then in a bad recession and the Bretton Woods Crisis at hand. The Sears Tower (now the Willis Tower) began construction in April of 1971 and opened in May of 1973 during the 1973–1974 stock market crash and the 1973 oil crisis.

Such alerts indicate looming danger in the economy of significance. However, the danger is not necessarily imminent. The next pivotal date is when the construction project reaches a point where it has broken the record. That date is difficult to estimate given the whims of construction. Media reports indicate that the Jeddah project will possibly be completed in 2020 without indicating whether that date is the record setting date, the completion date, or the opening ceremonies.

It is significant that the record being broken by the Jeddah Tower is the record set by the Burj Khalifa in Dubai. In some ways, the Burj Khalifa has become something of a symbol of the excesses of the last bubble.

Set to become the tallest building in the world, the Burj Khalifa in 2009 began to experience financial trouble and had to delay payment on its debt to finance construction. When the Burj Khalifa officially opened in January of 2010, the sovereign fund of the United Arab Emirates, which built the skyscraper, was broke and had to be bailed out by the sheikh of Abu Dhabi for $10 billion.

So, will this latest frenzy of new construction tip us off to the next bust? The skyscraper index is silent on the issue of timing so the dating of when the skyscraper curse is apparent is just guess work. It seems that the boom-bust cycle reaches its peak around the time the new record is set and is called a Skyscraper Signal, if imminent economic danger is looming. In most episodes, record breaking skyscrapers have their opening ceremonies when the economic crisis is readily apparent.

The important thing to remember is that skyscrapers do not cause economic crises. Rather they are just a very noticeable example of the distortions taking place throughout the economy when interest rates are keep artificially low by the central bank.

In addition to record breaking skyscrapers, there are many less perceptible changes taking place. Entrepreneurs are building bigger, longer term projects and production processes. Relative prices, i.e., interest, land, capital, and labor prices, are being distorted. Technology, nearly everywhere, is on the fast track. The economy is booming.

If the Skyscraper Curse is at work, then these distorted economic activities will soon be revealed to be malinvestments.

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Fri, 01/01/2016 - 16:48 | 6986276 E.F. Mutton
E.F. Mutton's picture

All those skyscrapers.  Some serious Freudian Dick Measuring going on.

Fri, 01/01/2016 - 17:24 | 6986372 stacking12321
stacking12321's picture

huh, that's odd, there's a building on that chart called "world trade center", supposed to be in new york, tallest as of 1972/73.

i tried finding it on google maps but i couldn't...wonder what happened to it?

Fri, 01/01/2016 - 18:37 | 6986515 I Will Explain All
I Will Explain All's picture

Might be dune cunes paying for it, but European architect https://en.wikipedia.org/wiki/Adrian_Smith_%28architect%29

#whitegenocide

Sat, 01/02/2016 - 01:45 | 6987383 OldPhart
OldPhart's picture

Better, it's being built by the BinLaden Group.

Fri, 01/01/2016 - 18:20 | 6986520 The central planners
The central planners's picture

It was destroyed in 2001 in a false flag attack by the zionist bankers mafia in order to have the excuse to invade Irak that by then was selling oil in euros and was putting the dollar world reserve currency at risk.

Fri, 01/01/2016 - 18:39 | 6986566 Escrava Isaura
Escrava Isaura's picture

 

 

There's only one place worth invading: RUSSIA.

Any other location US CAN NOT afford because it won’t pay for the invasion, even if the US succeed.

 

“Brace yourself! The American Empire is over. The descent is going to be horrifying!” Chris Hedges

 

 

 

Fri, 01/01/2016 - 19:08 | 6986655 Stuck on Zero
Stuck on Zero's picture

Trantor here we come.

Fri, 01/01/2016 - 23:41 | 6987221 Chris Dakota
Chris Dakota's picture

.

Fri, 01/01/2016 - 23:42 | 6987223 Chris Dakota
Chris Dakota's picture

It's the TRUMP TOWER thing goin on.

Banned Muslim Jeddah Tower

......lol

Sat, 01/02/2016 - 01:42 | 6987381 robertsgt40
robertsgt40's picture

I think a more efficient use of funds would be to built a few ghost cities.

Fri, 01/01/2016 - 16:56 | 6986304 Motasaurus
Motasaurus's picture

I applaud the constant need to prove that "mine is bigger than yours" because it's all working towards a functioning space ladder.

Fri, 01/01/2016 - 17:41 | 6986412 DavidC
DavidC's picture

For sure.

What is the POINT? Other than dick measuring.

DavidC

Sat, 01/02/2016 - 03:07 | 6987236 Chris Dakota
Chris Dakota's picture

It's actually low interest rates that fuel these towers and low wages.

The middle east is horrific in their treatment of the foreign workers

who build those towers.

See America after stock market crash, depression building.

And the elites build giant towers to show  how bad they schlonged the public.

Sat, 01/02/2016 - 04:42 | 6987502 The central planners
The central planners's picture

So.. according to this UAE has the biggest clit.

Fri, 01/01/2016 - 16:52 | 6986291 GhostOfDiogenes
GhostOfDiogenes's picture

Who will win....the skyscraper gap?

Fri, 01/01/2016 - 17:22 | 6986367 t_kAyk
t_kAyk's picture

They've yet to build the tower of Babel, so we have that to look forward to

Fri, 01/01/2016 - 17:42 | 6986415 DavidC
DavidC's picture

That made me smile!

DavidC

Fri, 01/01/2016 - 20:12 | 6986812 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

 

They've yet to build the tower of Babel

Have you ever seen pictures of the headquarters of the European Union?  It is known as the "Tower" building and was designed to resemble paintings of the biblical "Tower of Babel" by Pieter Bruegel.

http://deadlinelive.info/wp-content/uploads/2012/11/Tower-Of-Babel-By-Pi...

Now, if perhaps you think the comparison and insinuation that this building design was entirely intentional in its reference to Bruegel's Tower of Bable is too much conjecture, then look at the following promo poster for the EU from 1992 -- see if that helps clarify the intent.

 

http://bilder.vgb.no/8970/img_4429067786def.jpg

The caption on the poster reads: "Europe: Many tongues, One Voice"

 

Fri, 01/01/2016 - 17:25 | 6986375 Skateboarder
Skateboarder's picture

Holy shit - following the exponentiation, the next one's gotta be twice the height of the Burj.

Fri, 01/01/2016 - 17:41 | 6986401 Spiritof42
Spiritof42's picture

I was wondering what kind of foundation the Jeddah Tower in Dubai is built on. NYC is built on solid bedrock. Not so Dubai.

the foundation and piling had to be uniquely designed to overcome subsurface issues such as soft bedrock and porous coral rock, which normally could not support a skyscraper without settling. The foundation will be similar to that of the Burj Khalifa, but larger. It is expected to be around average 4.5 metres (15 ft) deep with a concrete pad of around 7,500 m2 (80,729 sq ft). The concrete will have to have low permeability to keep out corrosive salt water from the Red Sea. Its depth and size is also considered to be an indicator of what the tower's final height will be.[126] The piles will be up to 200 metres (656 ft) deep and the pad over 90 metres (295 ft) across, yet even still the building, which will weigh over 900,000 tons, is expected to settle. The idea is that it settles evenly enough so that the building doesn't tip or put undue stress on the superstructure. Computer modeling programs performed tests at the site to confirm that the foundation design would work. A later design for the foundation, to be constructed by Bauer in 2013, calls for 270 bored piles up to 110 metres (361 ft) deep which have to be installed into the difficult ground conditions. Some materials needed for the structure are 500,000 cubic meters of concrete and 80,000 tons of steel.

https://en.wikipedia.org/wiki/Jeddah_Tower

The project looks extremely risky to me. If their models have the slightest error ...

Sat, 01/02/2016 - 05:01 | 6987513 dreadnaught
dreadnaught's picture

dont they ever have earthquakes in that area-?

Fri, 01/01/2016 - 17:40 | 6986409 Consuelo
Consuelo's picture

 

 

Whether one constructs a 100' tower or a 5,280' tower in the Middle East, what in the bloody hell is there worth viewing...?

Fri, 01/01/2016 - 17:52 | 6986443 buzzkillb
buzzkillb's picture

I have eaten at the 123rd floor of the Burj and it was pretty cool to see the man made islands washing away from so high up.

Fri, 01/01/2016 - 17:57 | 6986458 Consuelo
Consuelo's picture

A zip line from that restaruant down to one of those palm frond island dealies would be fairly rockin'...

Fri, 01/01/2016 - 17:48 | 6986433 I Write Code
I Write Code's picture

$1.2b sounds awfully low, you can hardly buy a good sized cruise ship for that kind of money.  Or a B-2 bomber with leather seats, and that doesn't even include service after 90 days.

Sat, 01/02/2016 - 05:42 | 6987549 Canoe Driver
Canoe Driver's picture

It will end up costing 3 to 4 billion USD after all the construction defects are half-ass repaired. It will also take nearly 20 years to sort of "complete." Remember, this is Saudi, not Dubai.

Fri, 01/01/2016 - 17:55 | 6986440 christiangustafson
christiangustafson's picture

Hmm, no mention at all of the Central Park Tower going up in midtown Manhattan?

And of course there is this detailed National Geographic piece on all of the recent and planned high-rise buildings in NYC.

Point certainly taken re the Skyscraper Omen, however.

Due diligence, please!  

 

Fri, 01/01/2016 - 18:50 | 6986606 kill switch
kill switch's picture
Will 2016 Be The End Of The Current Skyscraper Boom?

 

 

Not on my list of things to worry about,, tall buildings, who gives a fuck?...As is the current corruption of the CFTC on the PM manipulation and overall disintegration of the,, I'm all for it the fucking EMPIRE.... It is totally unsustainable as we all know....You can see it!! It's over....Cover your ass folks it's near..

Fri, 01/01/2016 - 19:17 | 6986674 db51
db51's picture

They left the Tower or Babel off that list.

Fri, 01/01/2016 - 20:13 | 6986818 Dragon HAwk
Dragon HAwk's picture

Please remain in the Building... Everything is Under Control

Fri, 01/01/2016 - 22:16 | 6987076 Abbie Normal
Abbie Normal's picture

The Taipei 101 looks like they just stacked a bunch of take-out boxes on top of each other -- rather fitting if you like Chinese food.

Fri, 01/01/2016 - 22:58 | 6987163 DeadCatBouncer
DeadCatBouncer's picture

These buildings are brothers to the Egyptian pyramids and last constructions of Rome.

They are monuments to the Parasite Class' theft and destruction of society except unlike the Pyramids and Mayan temples they will not last more than a few years or decades after the Excession swings into full gear.

Sat, 01/02/2016 - 01:41 | 6987376 Name Already Taken
Name Already Taken's picture

I can understand if these ultra rich wanted obscene amounts of wealth so they can like perform a manned mission to Pluto, cure cancer, extend their lifespans or something that are inaccessible to the poor.

Instead they actually can't even remotely do any of those things or even having the vision to which shows how completely pathetic their wealth is beyond buying more of the same.

 

Sat, 01/02/2016 - 07:08 | 6987625 Yttrium Gold Ni...
Yttrium Gold Nitrogen's picture

I don't quite get that International Business Times reference to 5.7 million square feet of concrete. Volume is measured in cubic units of length, as in cubic feet, cubic meters, cubic inches and so forth.

Sat, 01/02/2016 - 13:06 | 6988297 Bemused Observer
Bemused Observer's picture

Anybody who would go into one of these buildings is insane...They keep building higher and higher, and like all else, at the same time they cut corners and costs, and the stuff being made is shoddier and shoddier...

This phenomenon causes me no end of frustration when I'm dealing with something like an appliance, or light fixture. But when that shit goes wrong, I'm not dropped 20-plus stories to the pavement below.

I'd trust a building like the Empire State Building, but for anything built in the past 30 years, I won't go above the third floor.

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