Why Saudi Arabia’s Plan to Build the World’s Largest Skyscraper Could Spell Doom for the Global Economy

Kingdom Tower
Kingdom Tower

Saudi Arabia is expected to begin work on the Kingdom Tower next week.

The building in Jeddah is expected to cost $1.23 billion and stand 3,280 feet tall, according to the Saudi Gazette.

That’s 568 feet taller than Dubai’s Burj Khalifa.

Construction is also underway on Sky City in China, projected to be 2,749 feet tall. Sky City is expected to finish before the Kingdom Tower and will, for a very brief period, hold the title of the world’s tallest building.

Two years ago, Barclays introduced its Skyscraper Index, which suggests that construction booms, highlighted by record-breaking skyscrapers, coincide with the beginning of economic downturns.

In his 2012 report, Barclays’ Andrew Lawrence and his team wrote that this is because “the world’s tallest buildings are simply the edifice of a broader skyscraper building boom, reflecting a widespread misallocation of capital and an impending economic correction.”

But it isn’t just the world’s tallest building we should be looking at. Lawrence said it’s also important to look at the number of skyscrapers being built and their geographic profile. This is because the tallest buildings “rarely stand alone.”

With this in mind, investors should watch the building booms in China, India, and Saudi Arabia.

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SOURCE:  
Business Insider

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