The Skyscraper Curse: Myth or Reality?
This article explores the theory linking the construction of skyscrapers to economic downturns, also known as the "Skyscraper Curse." It examines the evidence for and against this theory, including recent research that challenges the idea of a causal relationship.
Introduction

A skyscraper is a tall, continuously habitable building with multiple floors. Modern definitions typically classify skyscrapers as being at least 100 to 150 meters in height, though there is no universally accepted definition beyond being a very tall high-rise building. Historically, the term "skyscraper" initially referred to buildings with between 10 and 20 storeys when these structures first began to be constructed in the 1880s. Skyscrapers can host a variety of functions, including offices, hotels, residential spaces, and retail spaces. (https://en.wikipedia.org/wiki/Skyscraper)
In 2009, the Burj Khalifa in Dubai became the tallest skyscraper ever constructed, standing at 828 meters. This building marked a significant step change in height. The previous tallest structure, the CN Tower in Toronto, was only 553 meters high, and the tallest structure before that, the Warsaw Radio Mast, which collapsed in 1991, was 646 meters high (Parker, 2015). Currently, the Jeddah Tower (previously known as the Kingdom Tower) in Jeddah, Saudi Arabia, is under construction. It will reach one kilometer high, making it the world’s tallest skyscraper, doubling the height of One World Trade Center in New York, the tallest skyscraper in the USA. According to the Council on Tall Buildings and Urban Habitat, over half of the skyscrapers completed in recent years, i.e., skyscraper taller than 200 meters, were in China. China has been experiencing a dramatic skyscraper boom since the early 2000s (Li and Wang, 2020).
There has also been an increasing attraction of economists to the relationship between skyscrapers and economic crises. Several economists have examined the data and tried to make correlation between the height of tall skyscrapers and the underlying causes and relationships it has on the economy of countries building such skyscrapers.
Skyscraper Curse

Andrew Lawrence (1999), then with the investment bank Dresdner Kleinwort Benson, identified and coined the phrase "skyscraper curse." This concept links the completion of the world’s tallest skyscrapers to the onset of global economic crises (Economist, 2015). Also known as "the skyscraper effect" or "the skyscraper index," Lawrence's theory suggests that building booms result from easy credit conditions and expansionary monetary policy (www.investopedia.com). He based his index on historical data from the United States, focusing solely on record-breaking skyscrapers while dismissing overall construction and investment statistics.
Lawrence's first notable example was the Panic of 1907, coinciding with the unveiling of the Singer Building (186.6 meters) and the Metropolitan Life Insurance Company Tower (now MetLife Tower) (213 meters) in New York in 1908 and 1909, respectively (see also Table 1 and Fig.2). Met Life Tower remained the world's tallest building until 1913. Another example is the trio of super-tall skyscrapers built during the 1930s: 283 m tall 40 Wall Street, which was bought by the Trump Organization in 1992, the 319 m tall Chrysler Building (Structural Engineers: Ralph Squire & Sons), and the 381 m tall Empire State Building (Structural Engineers: Homer Gage Balcom), which were completed during the Great Depression. The Empire State Building (dubbed the “Empty State Building” due to the vacant areas in the building, which were not occupied due to the economic crisis) was the skyscraper from 1931 to 1970, until the first tower of the World Trade Center was topped out. Following the September 11 attacks in 2001, the Empire State Building again became the New York City's tallest building until it was surpassed in 2012 by One World Trade Center. A comparison of the relationship between announcement, record breaking, and opening dates of record skyscrapers with historic economic crises are provided in Table 1 (Boyle et al., 2016).

The World Trade Center towers (417 meters and 415 meters) in New York (Structural Engineer: Leslie E. Robertson, and Architect: Minoru Yamasaki) and the 442 m tall Sears Tower (now Willis Tower) in Chicago (Architect: Fazlur Rahman Khan, Bruce Graham, Skidmore, Owings & Merrill)) opened in 1974 amid the 1973–1974 stock market crash and the 1973 oil crisis. The 451.9 m tall Petronas Twin Towers in Kuala Lumpur, Malaysia (Structural Engineers: Thornton Tomasetti & Ranhill Bersekutu and Architect: César Pelli) opened in 1999 during the aftermath of the 1997 Asian Financial Crisis. The 508m tall Taipei 101 (Structural engineers: Evergreen Consulting Engineering and Thornton Tomasetti and Architects: C.Y. Lee and C.P. Wang) in Taiwan, completed in 2004, surpassed the Petronas Twin Towers and held the title until the 828m tall Burj Khalifa's completion in 2010 in Dubai, United Arab Emirates. Shortly after the Burj Khalifa's exterior was completed in October 2009, the Dubai government nearly defaulted on its loans, indicating a financial crisis.
In November 2000, Time Warner began constructing its $1.8 billion headquarters, the most costly single-building project in U.S. history. Two months later, Time Warner announced its infamous merger with AOL, resulting in significant financial losses.
Lawrence argued that building booms were due to over-investment, monetary expansion, and speculation. When these patterns become unsustainable, economic crises follow. But, he did not elaborate on these underlying issues.
This relationship between building height and the business cycle is widely reported in the media. It has been accepted by many people that the skyscraper height is a ‘bubble indicator’ (Thornton, 2005; Baker, 2009; Mansharamani, 2011; Voigt, 2011; Reina, 2012; Barnard, 2013, Economist, 2015). Thornton (2005, 2018) provides both a theoretical model for the skyscraper curse and additional evidence in support of the curse. According to Thornton, these buildings represent a form of over-investment in capital goods driven by artificially low interest rates, which leads to economic busts and eventually the bubble bursts.
These skyscraper projects take several years to complete and require significant financial resources (Subramanian, 2023). When interest rates are kept artificially low by central banks, the developers of these skyscraper projects are encouraged to borrow excessively and invest in such large-scale projects. Eventually, when interest rates rise the economic realities set in, and these investments become unsustainable, leading to economic downturns.

Some Recent Skyscraper Projects
The 609m (2000 feet) Shanghai Tower in China was officially crowned the second-tallest building in January 2016. On the same day, as if on cue, the country’s stock market plunged 7 percent in half an hour, causing trading to shut down for the rest of the day.
The Jeddah Tower (previously known as Kingdom Tower) in Jeddah, Saudi Arabia is planned to be the first 1 km (3,281 ft) skyscraper and would be the world's tallest building or structure upon completion. It is designed by the American Adrian Smith + Gordon Gill Architecture (Adrian Smith also designed the Burj Khalifa) and the Structural Engineers is the firm Thornton Tomasetti. The project cost is estimated to be SR4.45 billion (US$1.23 billion). On 16 August 2011, the geotechnical engineers Langan International announced that the foundation and piling were uniquely designed to overcome subsurface issues such as soft bedrock and porous coral rock, which normally could not support a skyscraper without settling. There was steady progress in the construction of the Jeddah Tower, but in January 2018, building owner Jeddah Economic City (JEC) halted structural concrete work with the tower about one-third completed due to labour issues with a contractor following the 2017–19 Saudi Arabian purge. After almost five years of inactivity, development works on the project resumed in 2023. In May 2024, the architect confirmed construction was resumed with completion estimated in four to five years, which would create an estimated completion date to occur in 2028 or 2029.
Although not a skyscraper project, Saudi Arabia, announced in 2022, its ambitious urban project ‘The Line’, in Neom, Tabuk Province, touted as a mega one-building city in the desert which will be 170 km long and ultimately house 9 million people (25% of Saudi Arabia's 2022 population of 35.5 million) by 2030, with a project cost of $500 billion (https://amp.cnn.com). The Line's plan consisted of two mirrored buildings with an outdoor space in between, having a total width of 200 m (660 ft) and a height of 500 m. It was designed to have no cars, streets or carbon emissions, and powered entirely by renewable energy. However, the project has been scaled back recently due to restrictions over funding. It is expected that by 2030 only a 2.4 km section of the city will be completed and less than 300,000 residents may live there, a reduction of more than 98% of the original estimate. Saudi Arabia recorded a budget deficit of SAR81 billion ($21.6 billion) in 2023, as expenditure increased while oil revenue fell, according to its finance ministry.
Criticism of the Skyscraper Curse
Recently, three economists from Rutgers University conducted research to examine the correlation between skyscraper heights and the business cycle (Barr et al., 2015). They hypothesized that if building a tallest structure is an indication that the business cycle has peaked, then the plan to build these structures can also be used to forecast GDP growth. Based on this hypothesis, they studied two types of data. First, they looked at the beginning and completion dates of the world's tallest buildings and the peaks and troughs of the United States business cycle, as measured by the National Bureau of Economic Research. They found no significant relationship between the timing of record-tall buildings and the business cycle. During economic booms, developers built super-tall buildings to capitalize on rising incomes and increased demand for office space. They also found that economic factors such as a fall in interest rate and building costs, an increase in population and job growth all increase height of tall buildings.
Barr et al., 2015, then investigated the relationship between the height of tall buildings and per capita GDP using the time series techniques of vector autoregressions (VARs) each year and then conducting Granger casualty and cointegration tests. This analysis was performed for the tall buildings in the United States, Canada, China, and Hong Kong. It was found that in all the cases considered, per capita GDP and the height of tall buildings were cointegrated. These findings lead to the conclusions that (https://en.wikipedia.org/)
- Height of tall buildings is not a useful predictor of the business cycle
- While the height may temporarily deviate from the output, over the long run, height and output move together
- The height of a tall building cannot be used to predict changes in GDP
- However, GDP can be used to predict changes in height; In other words, how high a building is constructed depends on how rapidly the economy is growing but it does not indicate an imminent recession.
References
- Baker, T. (2009). “When Skyscrapers Signal a Downturn.” Guardian.co.uk, Oct. 13, www.guardian.co.uk/artanddesign/2009/oct/13/skyscraperssignal-downturn
- Barr, J., Mizrach, B. and Mundra, K. (2015) "Skyscraper Height and the Business Cycle: Separating Myth from Reality", Applied Economics, Vol. 47 No.2, pp.148-160. https://kmundra.newark.rutgers.edu/files/2014/10/bmm_skyscraper_appliedeconfinal22sept14.pdf
- Boyle, E., Engelhardt, L. M. and Thornton, M. (2016) "Is There Such a Thing as a Skyscraper Curse", The Quarterly Journal of Austrian Economics, Vol. 19, No.2, pp. 149-168.
- Economist (2015) “Is There Such a Thing as the Skyscraper Curse?” March 28, p.80.
- Honorée, A., Morgan, Y.-C.T. and Krenn, K. (2018) "Heights of privilege: economic and cultural determinants of skyscraper height across the world", International Journal of Construction Management, Vol. 20, No.7, pp.761-774.
- Lawrence, A. (1999) The Curse Bites: Skyscraper Index Strikes, Property Report, Dresdner Kelinwort Benson Research.
- Li,Q., and Wang, L. (2020) "Is the Chinese skyscraper boom excessive?", Journal of Urban Affairs, Vol. 44, No.8, pp.1117-1135.
- Mansharamani, V. (2011) “Skyscrapers Are A Great Bubble Indicator” www.forbes.com/2011/03/10/skyscrapers-burj-dubaileadership-leaders-bubbles.html
- Parker, M. (2015) "Vertical capitalism: Skyscrapers and organization", Culture and Organization, Vol. 21, No.3, pp. 217-234.
- Reina, P. (2012) “Study Claims Correlation Between Super-tower Construction and Economic Busts”, Engineering News-Record, Feb.6.
- Subramanian, N. (2023) “Managing Cost and Time Overruns of Megaprojects”, New Building Materials & Construction World (NBM&CW), Vol. 29, No.2, Aug. 2023, pp.2-7.
- Thornton, M. (2005) “Skyscrapers and Business Cycles.” Quarterly Journal of Austrian Economics, Vol. 8, No. 1, pp. 51–74
- Thornton, M., (2018) The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crisis of the Last Century, Mises Institute, Auburn, Alabama, 278 pp. https://cdn.mises.org/The%20Skyscraper%20Curse.pdf
- Voigt, K. (2011) “China Skyscraper Boom Portend a Property Crash?” http://business.blogs.cnn.com, Jan. 5th.
- www.investopedia.com/terms/s/skyscraper-effect.asp
- Interview with Andrew Lawrence-Talking Tall: The Skyscraper Index, https://global.ctbuh.org/resources/papers/51-Journal2012_IssueII_InterviewX.pdf
- https://en.wikipe dia.org/wiki/Skysc raper_Index
About the Author

Dr. N. Subramanian, Ph.D., F.ASCE, FNAE, is an award-winning author, consultant, and mentor, living in the USA. With a doctorate from IITM, he worked with the TU Berlin and the TU Bundeswehr, Munich as AvH Fellow. He has over 46 years of professional experience in consultancy, research, and teaching, and has designed 800 projects and developed several software packages. He has authored 25 books and over 300 papers. He served as vice president of the Indian Concrete Institute and the Association of Consulting Civil Engineers (India) and is a recipient of several awards. He serves on the Editorial Board/Review Committee of several international and Indian journals.