Dubai, January 16: As Barclay Capital terms its Skyscraper Index finding on an “unhealthy correlation“ between the building of skyscrapers and impending financial crashes “remarkably accurate”, then Saudi Arabia must brace up for an impending economic crisis.
Local media reports inform that construction work on $1.2 billion Kingdom Tower, rising over 3,280 feet, in Jeddah will start this month with completion expected during 2016-2017.
In an emailed reply, Andrew Lawrence Director, Property Research, Asia Ex-Japan Equities, Barclays Capital, told that the report has not taken into account the Kingdom Tower since it only includes towers under construction.
“Obviously if it does go ahead, and given past developments a five to six year build period would be likely, it would raise concerns over the economic outlook for 2016/17,” he said.
According to International Monetary Fund, the net foreign assets of Saudi Arabia, the world’s dominant oil exporter, already peaked at around $441 billion at the end of 2010 and are projected to reach an all-time high of $535.4 billion at the end of 2011. A Reuters poll in September last year found the country is expected to post a positive fiscal balance of 4.1 percent of gross domestic product in 2011 compared to 2.7 percent in 2010.
As the Skyscraper Index (first published in 1999) shows, the link between construction of the world’s tallest building and an economic crisis has proved “remarkably accurate”. It may have started with the Tower of Babel, but over the past 140 years an unhealthy correlation exists between the building of the world’s the next tallest building and an impending financial crisis: New York 1930, Chicago 1974, Kuala Lumpur 1997, Dubai 2010.
The focus of the equation is now shifting to Asia, particularly China and India.
China will complete 53 per cent of the 124 skyscrapers under construction over the next six years. The country now has 75 completed skyscrapers above 240 metres in height - but the average height of the skyscrapers that it is building is also increasing as past liquidity fuels the construction boom.
India has only two of the world’s 276 skyscrapers over 240 metres in height, yet over the next five years it intends to complete 14 new skyscrapers, in what will prove to be its largest skyscraper building boom.
“For, if history proves to be right, this building boom in China and India could simply be a reflection of a misallocation of capital, which may result in an economic correction for two of Asia’s largest economies in the next five years,” the report says.
Why Saudi should brace up for a slump in 2016
The Wahabis are expected to change their way of affluent life style as the accumulation of wealth from the sale of oil, will never be allowed repatriation as there is nothing left of it. The piece of paper it’s written on is only worth its weight as waste paper; Simply put the Federal Bonds and the Gilt Edge have lost their shine after the Credit Crunch in 2007 immediately followed by recession thereafter the stories are a lost cause.
The acquiring of Arms by Saudi Arabia is to support the fledgling economics of the west the bases of this transaction would be on the understanding of leaving the old oil accounts to one side; carrying on afresh accounting method [weapons for oil] as they do not have inkling to repay the outstanding.
Purchasing of F15s is merely to save the war mongering countries and their factories from closure; in case of war the Fighter Jets will remain grounded under the no fly zone imposition by the UN; if at war? The so-called enemy would have Air superiority to keep you grounded.
All that construction taking place doesn’t take long to destroy so any building program should be put on hold; Building Silos for Grain storage and Water Storage and vital essentials to support life in case of calamity is however justified.
Getting rid of the Royalty and forming an Islamic Republic of Saudi Arabia would be welcome news for all Muslims world over; Two Thousand Sixteen is long way off.
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