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May 20, 2015

Is China Under The Skyscraper Curse?

By EconMatters


China Builds World's 2nd Tallest Skyscraper

The world's 2nd tallest skyscraper, Shanghai Tower, at Lujiazui, Pudong, Shanghai, China is to open to the public in a month or two (mid-2015). It measures 2,073 feet with 128 stories in the financial district of Shanghai, only surpassed by Burj Khalifa in Dubai at 2,722 ft.

Once the building is completely open, it is expected 20,000 to 30,000 people will pass through each day.  It was built for about $3 billion by the Shanghai Tower Construction and Development Co., a state-owned enterprise.

Loved By Asia & Middle East  

In recent years, skyscraper seems to serve more of a symbolism of status rather than an actual real estate commercial project.  In the case of Shanghai Tower, special computerized damper, and other additional special designs have to be implemented to prevent the building from swaying in heavy winds from, for example, typhoons.   In all Shanghai Tower, there are 21 sky lobbies (mostly public spaces) that can't be rented out to make money.  So basically these types of design elements would never make the ROI economics and be constructed in the United States.

This is probably part of the reason why skyscrapers are dwindling in the more developed regions like Europe and North America while regions with greater State wealth and authority like Asia and the Middle East, seem to have developed an affinity (see chart below).    

Chart Source: Zero Hedge

Skyscraper Index Curse?

Back in 2010, China commissioned and put a replica of the Wall Street bull in Pudong, Shanghai to stake its rightful place on the global financial stage as an equal to New York.  A skyscraper just seems a natural follow-up 5 year later.  However, Shanghai Tower will not stay as the tallest building in China for very long, Shenzhen's 2,170-ft Ping An Finance Center will surpass the Shanghai Tower when it is completed in 2016. 
            

Chart Source: economicreason.com

Nevertheless, the fact is that Shanghai Tower is opening during the darkest period of China's economy in recent years.  This make me wonder if the skyscraper index which showed that the world's tallest buildings have risen on the eve of economic downturns (see graph above) could have some predictive value than mere coincidence.

For example, Taipei 101 was the tallest building in the world before Burj Khalifa came along in 2010, but till this day, many in Taiwan still believe the erection of Taipei 101 negatively affected the island's 'natural flow of prosperity'.  Dubai economy has not fared well after Burj Khalifa either.  With a similarly deep cultural root in symbolism and Fengshui, it is no wonder that Sky City, the planned skyscraper taller than Burj Khalifa in Changsha, Hunan in south-central China has never got off ground.

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