Barclays Capital yesterday warned of an 'unhealthy' link between towering edifices and financial woes, in its latest annual Skyscraper Index survey.
It noted that China is currently the biggest builder of skyscrapers, while booming India is constructing the second largest tower in the world.
'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,' it said.
According to the Skyscraper Index, construction of the world's tallest buildings has been linked to impending financial crises over the last 140 years.
For example, the Great Depression hit as the finishing touches were being put on the Empire State Building in New York in 1931, while the Asian financial crisis hit as Kuala Lumpur's Petronas Towers were finished in 1997.
Dubai's Burj Khalifa, completed in 2010, is now the world's tallest building at 828m. As it was being built, Dubai nearly went bust and the world slid into the Great Recession.
'Building booms are a sign of excess credit,' said Mr Andrew Lawrence, director of property research and lead author of the report.
Historically, he noted, skyscraper construction has been characterised by bursts of sporadic but intense activity that coincide with easy credit, rising land prices and excessive optimism. But often, by the time the skyscrapers are finished, the economy would have slipped into recession.
The Barclays Capital report described China as the world's 'biggest bubble builder'. More than half - 53 per cent - of the 124 skyscrapers being built globally are in the Asian giant, which is primed to increase its stock of skyscrapers by a 'staggering' 87 per cent.
Said the report: 'China's skyscrapers are not only increasing in number - it now has 75 completed skyscrapers above 240m in height - but the average height of the skyscrapers that it is building is also increasing as past liquidity fuels the construction boom.'
Mr Lawrence noted that China's property market is already wobbling, with residential property sales dropping in Beijing and Shanghai.
India, too, is 'playing catch-up', the report added.
'Today India has only two of the world's 276 skyscrapers over 240m 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.
'Worryingly as well, India is also constructing the second tallest building in the world, the Tower of India, which should (be completed) by 2016.'
Meanwhile, the country's non-performing loans - a substantial number of them to real estate ventures - grew by nearly a third in the first half of this fiscal year, far more than it has been growing in the past five years.
'If history proves to be right, this building boom in India and China could simply be a reflection of a misallocation of capital, which may result in an economic correction... in the next five years,' the report said.
AGENCE FRANCE-PRESSE, ASSOCIATED PRESS
