China's skyscraper boom may foreshadow economic bust

The skyscraper building boom in China may indicate impending financial turmoil in the country, according to the BBC, which cited a report released by Barclays Capital, on Wednesday.

The report said the building of skyscrapers could have an "unhealthy correlation" with subsequent financial collapses. For example, the world's first skyscraper, the Equitable Life building in New York, was established in 1873 and coincided with a five-year recession. In 1912, the building was destroyed by fire.

The Empire State Building was constructed as the Great Depression got underway, and the Burj Khalifa, currently the world's tallest building, was built just before Dubai almost went bust. Other examples include Chicago's Willis Tower in 1974, just as there was an oil shock and the U.S. dollar's peg to gold was jettisoned.

There's also the Petronas Towers in Malaysia (completed in 1998), which coincided with the Asian financial crisis.

"Often 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," Barclays Capital analysts said.

If the analysis is correct, then investors should be worried about China, which is now the biggest builder of skyscrapers in the world. About 53 percent of all the tall buildings in the world are constructed here, said the bank.

A lending boom following the global financial crisis in 2008 pushed prices higher in China and, according to JPMorgan Chase, the Chinese property market could drop by as much as 20 percent in value in its major cities within the next 12 to 18 months.

If rushing to build ever-taller skyscrapers is a guide to future economic health, China could be the next country to go bust.