China Real Estate: Skyscraper Index Revisited

Andrew Lawrence, now with Barclays Capital, published a new research report which followed up his own invention some 11 years ago: Skyscraper Index. 11 years ago, he found that completions of the world’s tallest buildings at that time almost invariably coincided with major financial crises, so he dubbed a humorous “skyscraper index” which is a good indicator of economic crisis. From Chrysler Building and Empire State Building at the Great Depression, to the Burj Khalifa (Burj Dubai) in 2010, the skyscraper index seemed to have astonishing accuracy.

Of course, Burj Khalifa’s record in terms of height will not be surpassed by any buildings in any foreseeable future because it was simply too tall (828 m). But no more new “world’s tallest building at the time” for the next 10 years does not mean that there will not be any financial crises. The new report by Andrew Lawrence pointed out that China will be building 40% of all skyscrapers in the coming 6 years or so, even though none of them will surpass Burj Khalifa in terms of height. I think his new report is not vivid enough in illustrating the building boom in China. To give you a better idea of how the building boom really looks like in China, I shall point you to a compilation at Skyscrapercity on China supertalls projects.

Besides the long list of supertalls building projects under constructions and planning, you can actually see some of the pictures of the proposed buildings, which, some of them at least, look extremely extravagant. For example, a rejected design of Chongqing Urban Forest will blow your mind.

Perhaps you would be thankful that Burj Khalifa’s record won’t be broken for years, but as far as the China real estate bubble is concerned, I would rather stay cautious. In short, the new skyscraper index is flashing a red warning sign now regarding the China’s real estate bubble.

Update (1 Jan 2011): The Independent reported that China is planning a Burj Khalifa-style 7-star hotel… God bless

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.