Of Skyscrapers as Early Indicators of Economic Downturn

Pride goes before a fall as the saying goes. A few weeks ago I read somewhere that construction of the 1 km (3,281-feet) tall Nakheel tower in Dubai had been suspended. According to a spokesperson work on the foundation will commence again in 12 months time and would take three years to complete.

The Nakheel tower is not be confused with the Burj Dubai skyscraper, which is due to be completed in September 2009 and which now stands at 818 meter. The Nakheel tower was not the only skyscraper scheduled to outstrip it. But since all of these projects have now been cancelled or put on hold, for some time to come the Burj Dubai will remain the tallest man-made structure ever built.

I can see why Dubai is trying to diversify its economy to become a financial hub and a tourist destination, knowing that one day its oil (and that of its neighbours) will run out. As a matter of fact oil revenues already account for less than 10% of the emirate's GDP. Tourism, property and financial services are the main sources of income. But one day not only the oil in Dubai will run out. And so within the greater scheme of things, taking into account global warming and so on, I am sceptical about the long term (> 25 years) prospects for the Gulf region.

About a year ago I wrote about the correlation between architecture and finance. Of course economic booms tend to coincide with real estate booms, if not bubbles. I think that the moment project developers start planning a new "tallest skyscraper" the beginning of the end is at least not far. It means that hubris has become a factor again and that money has become too easy.

Obviously I'm not the first person to make this connection. In fact one commentator wrote about it in relation to the current downturn as early as December 2006 and again this February.

The photos of the Burj Dubai are pretty stunning though.

The paintings are The Tower of Bable by Pieter Brueghel, of course. The one above is at the Museum Boymans-van Beuningen, Rotterdam, the one below at the Kunsthistorisches Museum, Vienna.