Skyscraper Index and China

The Skyscraper Index is an encapsulation of social mood. At peak social mood, man reaches for the heavens and looks to outdo his rivals, building the tallest skyscraper in the world. Coincident economic factors including demand for commercial office space, real estate bubble and easy financing for a massive development. For predictive purposes, sometimes a skyscraper is completed before the market peaks, sometimes after.

China Soaring Skyscrapers Latest Confirmation Of Housing Bubble, Barclays Finds

The completion of the Park Row Building, New York in 1899 and Philadelphia City Hall in 1901 foretold the US stock market crash and panic of 1901.

The construction of the Singer Building, completed in 1908, and the Metropolitan Life building, completed in 1909, both in New York, coincided with an economic crisis in the United States which commenced in October 1907 reflecting a monetary expansion brought about by the establishment of trust companies. The Woolworth Building, New York, that opened on 24 April 1913 coincided with the 1Q13 peaking of the US economy and a fall in GDP that lasted until 4Q14.

The Great Depression, marking the end of the extended post-World War I boom, was matched by three record breaking New York skyscrapers: 40 Wall Street in 1929; The Chrysler Building in 1930 and the Empire State Building in 1931.

The completion of One World Trade Centre, New York in 1972, Two World Trade Centre, New York in 1973 and The Sears Tower, Chicago in 1974 marked a period of US currency speculation, the collapse of the Bretton Woods system and the OPEC price rises which caused an economic crisis across the world.

Perhaps unsurprisingly, the first of the world's tallest buildings in the last 130 years to be built outside the US heralded its own regional crisis. The completion of Petronas Towers, Kuala Lumpur in 1997 was followed by a region-wide economic crisis and the collapse of Asian currencies. Likewise in technology-centric Taiwan, Taipei 101, although completed in 2004, start of construction in 1999 was well timed to coincide with the early 2000s recession and the end of the technology bubble.

Where is China now?

Looking forward, using skyscrapers under construction, it is evident that the skyscraper boom in China continues to grow. 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.

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.

More charts and info at the link. China Soaring Skyscrapers Latest Confirmation Of Housing Bubble, Barclays Finds