Asia’s skyscraper supremacy

[JACK-2]

www.globalpost.com/dispatch/news/regions/asia-pacific/thailand/111005/asia%E2%80%99s-skyscraper-supremacy


BANGKOK, Thailand — For Americans fretting over U.S. decline, here’s another thump to the ego: the nation’s mightiest skyscrapers will soon be bested by towers in cities you’ve probably never heard of.
Consider all the hype surrounding One World Trade Center. When it's completed in 2013, it will be America's tallest, but only third in the world — hundreds of feet shorter than towers in Dubai and Mecca. By 2015, it will slip to seventh globally, assuming all towers currently under construction are completed. And by the end of the decade it could drop from the top ten list, according to data from the Council on Tall Buildings and Urban Habitat.
Shanghai and Seoul will soon claim higher buildings. So will lesser-known Chinese megacities Shenzhen, Wuhan and Tianjin.
In a more ascendent U.S. era, America proclaimed its prosperity with steel and glass towers from New York to Houston to Los Angeles. But Asia’s ongoing skyscraper boom has put U.S. skylines to shame.
Of the world’s 50 tallest buildings, half now tower over cities in Asia. The balance will tip even further once proposed or under-construction buildings are complete. At that point, New York's 540-meter tall One World Trade Center is likely to be the only American tower among the top 20.
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“Look at Chicago. It’s supposed to be the mecca of tall buildings architecture. But there’s nothing going on here now,” said Jan Klerks with the Chicago-based Council on Tall Buildings and Urban Habitat, which monitors skyscrapers worldwide.
“The U.S. just doesn’t have as much to prove anymore,” Klerks said. In China, however, it’s “not uncommon to find out some city you’re barely aware of is doing a 500-meter building.”
Beginning in 1901, nine American towers took turns sharing the “world’s tallest” superlative throughout the 20th century. The best known include the Empire State Building, Chicago’s Sears Tower (now called the Willis Tower) and the World Trade Center. Prior to America’s skyscraper dominance, the world’s tallest building was a Gothic church in Germany.
This competition has since shifted eastward. Rising Middle Eastern and Asian economies are now waging the battle to build the world’s tallest tower. The titleholder seems to change countries every to six to seven years.
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An Asian nation first stole the title, with Malaysia’s Petronas Towers, finished in 1998. That feat was quickly bested by Taiwan’s Taipei 101, completed in 2004, and followed by the current champion, Dubai’s Burj Khalifa, completed last year, and standing 828 meters tall.
The race is on to reach a new peak: the world’s first kilometer-high tower. For now, Saudi Arabia’s proposed “Kingdom Tower” is best positioned to be erected first. “They’ve got a serious proposal and serious money,” Klerks said.
From there, Klerks said, engineers will likely attempt a mile-high skyscraper. “From an engineering point of view, you could go a mile high and still stand up up to earthquakes and strong winds,” he said. (A mile-high tower would be roughly triple the height of the new 104-floor One World Trade Center.)
“If the question is how tall can you go, then you have to ask, ‘How deep are your pockets?’” Klerks said. “The taller you go, it gets exponentially more expensive.”
China, after three decades averaging 9 to 10 percent annual growth, has pockets that are plenty deep. Though unable to claim the world’s tallest building — planned towers in Saudi Arabia, the United Arab Emirates are vying for the top two spots this decade — China by 2015 is slated to be home to 21 of the world’s top 50 tallest buildings.
In just a few years, China will have a total of 37 buildings with 60 or more stories completed, according to figures collected by the tall buildings council. The U.S. will have 10. One U.S. contender, the proposed 150-story Chicago Spire, would have been the 10th tallest. But construction was halted after the 2008 financial crash.
“Partly as a symbol of economic power and prestige, China is stepping towards these super-tall buildings of 80 stories or more,” said Jason Pomeroy, a Singapore-based architect and academic with the firm Broadway Malyan.
But China’s tall-building boom is more than just a display of economic might. Each person flooding into China’s boom cities needs a place to live, Klerks said, and tall towers help contend with population density.
“In Shanghai, you’ll see whole oceans of bland, ordinary buildings that are quite tall,” he said. “Those are not the sexy, super-tall buildings. But they’re taking care of the people problem.”
The same holds true for the Asian tropics, where flashy buildings of 50 stories or more are sprouting in the Philippines, Indonesia and Malaysia.
Cambodia, among the region’s poorest countries, is also feeling the skyscraper itch. Officials there have boasted, rather dubiously, of plans to build the world’s tallest structure in the capital Phnom Penh, a hardscrabble city where roosters still dart into traffic.
Some overly ambitious projects are doomed to fizzle, Pomeroy said. “We are always going to see very extravagant proposals or mile-high towers,” he said. “But we’ve found that most buildings in the 40-to-60 story bracket really come to fruition.”
Meanwhile, America’s skylines appear to be shrinking.
Of the world’s top 30 tallest demolished buildings, eight of the top 10 were destroyed in the U.S. (Three towers, the twin World Trade Center buildings and nearby 7 World Trade Center, fell during the Sept. 11, 2001 terror attacks.) In recent decades, more than 750 floors of skyscraper construction have been demolished in the U.S., according to council figures.
But while America’s skyscraper glory is fading, and Asia’s skylines grow taller, Pomeroy notes a corollary between super-tall buildings and overreaching economies.
The Empire State Building opened amidst the Great Depression. Malaysia’s Petronas Towers opened in 1998, just as a financial crisis ripped through Asia. The current tallest tower, Dubai’s Burj Khalifa, opened following the 2008 global financial disaster.
“Dare I say it? There’s a paradox there,” Pomeroy said. “The ultra-exclusive tower that symbolizes power and prestige can mark the cataclysmic effects of a coming depression.”
Editor's note: This article has been updated to correct

[JACK-2]

Another article:

May 18th, 2007 | By Christopher Hancock | Category: International
Constructing the Empire State Building consumed 60,000 tons of steel…10 million bricks…1,172 miles of elevator cables…6,400 windows…60 miles of water pipes and over 3,500 miles of telephone and telegraph wires.

But the world’s tallest skyscraper is much more than the world’s top-quality office space. It symbolized the progress of a nation rebuilding — a beacon of economic growth. The strength of its image became universal.

One could argue the construction of the Empire State Building was a turning point for the U.S. economy and morale during the heart of the Great Depression, ushering in the world’s first skyscraper boom.

Soon, skyscrapers began popping up throughout the American landscape: In Atlanta, Dallas, Houston, Charlotte…the World Trade Center in 1972…the Sears Tower in ’73. Every U.S. skyline you see today grew in a span of about 40 years.

Right now, the world’s “second skyscraper boom” is currently under way, and to no one’s surprise, it’s happening in the newest region of massive economic growth…Asia.

These buildings require miles and miles of steel beams…hundreds of thousands of tons of cement… The Twin Towers alone consumed roughly 425,000 cubic yards of concrete… That’s enough concrete to lay a sidewalk five feet wide from New York to Washington, D.C. The building also required 12,000 miles of electric cable…198 miles of heating ducts…and 200,000 tons of steel.

Few people have ever stopped to think about the massive amounts of steel and cement that go into these structures. But those who did — especially in the early 1900s — could have made a fortune, especially those invested in steel.

Between 1904-1930, shares of U.S. Steel (X: NYSE) rose an average of 66% a year! Of all the components used in skyscrapers, steel grasps my interest the most.

Steel products are used in everything from the construction of buildings, bridges, railway rolling stocks, industrial pipes and tanks to numerous automobile parts and Campbell’s Soup cans.

If steel production per person in China alone were to climb to U.S. levels, it would mean that China’s aggregate steel use would double by the year 2031, to a level equal to the current consumption of the entire Western world. And when you add in developing countries like India, Malaysia, Indonesia and Vietnam, the numbers become staggering. We’ll get to the specific figures in a minute.

But first, think of this…

Unlike the general use we see here in the U.S., high-rise buildings in Asia will provide much more than Grade A office space… These buildings will be the bedrock for the region’s rapidly emerging middle-class housing.

You may remember the Levittowns that shot up across the United States over 50 years ago. These carefully planned neighborhoods provided affordable housing for the thousands of young soldiers returning home from World War II. But more importantly, these planned neighborhoods served as the new model for America’s booming middle-class suburban lifestyle.

The emerging markets of Southeast Asia are currently experiencing a similar transformation.

Except, they’re not peppering the landscape with tree-lined streets and 2.5-bedroom, 1.5-story ranch houses. High-rise apartment complexes are the new Levittowns of Asia.

You could easily move into one of these buildings and never find a need to leave. These buildings include everything from grocery stores and retail outlets to fitness centers with swimming pools.

Asian developers are utilizing this high-rise housing model for one specific reason: Land is scarce.

Most Asian economies lack the expansive terra firma we in the West find so readily abundant.

Take Singapore, for example… It’s roughly 3.5 times the size of Washington, D.C., with an economy greater than New Zealand’s and a growth rate double that of the United States’.

Hong Kong is another example: It’s only six times the size of our nation’s capital, with an annual GDP on par with Argentina and Portugal.

The point is…land is, and always will be, the most valuable asset in places like Hong Kong, Shanghai, Tokyo, Taipei and Singapore. These Asian cities lack the land for urban sprawl we in the U.S. see in places like Chicago, Washington, Houston, Los Angeles, Charlotte and Atlanta.

So when you can’t build out, you build up. And that’s exactly how these Asian economies are making their magnificent growth possible.

I travel back and forth to Asia a couple of times each year. Whether I’m in Hong Kong, Bangkok, Shenzhen or Shanghai, the landscape is constantly changing.

It’s dynamic…exciting…like nothing the world has ever seen. You feel like you’re watching a flipbook in real time as thousands of cranes blanket the landscape, lifting I-beam after I-beam to new heights. One ambitious plan calls for a 200-story high-rise on the edge of Hong Kong’s Victoria Harbor. That’s twice the size of the Empire State Building.

The need to build up instead of out also explains why seven of the world’s 10 tallest buildings are now found in Asia. And there is plenty of room and desire to build more.

100,000 Won’t Be Enough!

Right now, there are 10,498 skyscrapers here in the United States… That’s roughly one building for every 28,580 people. China currently boasts 3,603 skyscrapers…approximately 40% of the number of tall buildings in America. That may seem like a lot, especially when you consider China is still in the early phases of economic development.

But assuming America represents a mature economy, and assuming the ratio of skyscrapers to people here in the United States represents a logical target rate for further expansion (1:28,580), when you factor in China’s one billion-plus people, you find that China thus far has built only one skyscraper for every 362,562 people!

To reach our hypothetical ratio of 1:28,580, China would need to construct another 42,102 tall buildings to reach that mark.

When you look at the building-to-person ratio of India, the numbers become even more staggering. There is only one building for every 4.1 million people in India! In Indonesia, there’s one tall building for every 1.9 million people… In Vietnam, the ratio stands at one for every 3.7 million.

The following chart compares skyscraper development here in the United States with the developing countries of Southeast Asia:

US compared to Asian Countries

These countries combined would need to construct roughly 100,000 buildings to reach the American model of one tall building for every 28,580 people.

And remember, the American “comparison” discounts the Asian demand for residential housing.

This construction boom has already begun.

There are currently 1,322 high-rises, 13% of the total number in the U.S., either proposed or under construction right now in those 11 countries.

Total steel production last year equaled 770 million tons. Asian steel production accounted for 66% of that total. Assuming every ton of steel produced in 2006 were set aside for high-rise construction, and assuming current production levels remained stable, it would take roughly five-six years of world production to supply Asia’s potential appetite for I-beam and rivet consumption:

Five Years of Steel Production in Asia

If we just concentrated on Asian steel production, high-rise steel demand would consume between six-eight years of steel production.

High-Rises Aren’t the Only Industry Devouring Steel

I believe skyscrapers will be one of the many factors driving Asian steel markets for years to come.

The Asian automobile industry is certainly contributing its fair share.

The number of vehicles on China’s roads has almost quadrupled over the last decade. Currently, there are approximately 27 million vehicles running on gasoline and diesel. With a combination of rising disposable incomes and improved transportation networks, the automotive market will continue to soar.

There is no denying the fundamental strength on the demand side of the equation.

In fact, it’s pointless to argue which particular market will require the most steel in the years ahead. Demand will shift among consumers specializing in a variety of industries, ranging from buildings, bridges, railways, tin cans and cars… All sectors will experience periodic peaks and troughs over the course of sustained long-term growth. It’s all part of the natural business cycle.

The trick isn’t predicting industry-specific demand… The case for investing in the steel industry rests on one fundamental premise: “The nation that makes the cheapest steel has other nations at its feet.”

And I think there’s one specific steel company that will directly benefit from this long-term trend. So I recently launched a service called the Free Market Investor to inform readers on how to specifically capitalize on this trend as well as other opportunities around the globe.

Readers of Free Market Investor will receive investment advice comprised solely of foreign equities.

Right now, a majority of the world’s growth is taking place in Asia, specifically in China and India. So investments targeting that part of the world will play a significant role in shaping this new service.

But rest assured our research will not be captive to any particular sector or region of the world. Markets move and regions change. One month, we may focus on a considerably obscure mining company in the heart of Papua New Guinea…the next month, we may recommend something as common as PetroChina.

Remember, we focus on great businesses at good prices. There’s no telling where those businesses will be located. However, we’ll make sure they’re easy to buy and sell.

It’s been our experience that the majority of our readers are reluctant to purchase stocks on foreign exchanges.

Some argue that type of commitment and sophistication should be limited to a premier companion service.

We agree. That’s why Free Market Investor will ensure that all recommendations are actively traded on U.S. exchanges.

You won’t need a Wall Street broker or some fancy private bank to take part. A simple discount brokerage account will work just fine.

Now, I’m sure that tech stocks, swank hedge funds and their excessive fees and other “insider” investments make a great story. It makes you feel good to proudly tell your neighbor that your broker just slipped you into some exclusive, private nanotechnology company that promises to turn the Earth on its axis, reverse the spin and solve the world’s energy problems all at the same time.

Meanwhile, the value investor reading this letter will keep a good portion of his money in a boring company that supplies the world’s insatiable appetite for quality steel at rock bottom prices. He’ll drip the annual dividends and watch his capital grow. And he’ll make his investment like everyone should make their investments…with a margin of safety.

Next week, I’ll be back with another take on the small-cap universe.

Until Next Time,
Christopher Hancock
May 18, 2007

P.S.: Free markets are historically the best place to invest and that investments that can capitalize on a free market environment will rise fastest and farthest. It’s been said time and time again: Money flows where it is treated best. If you share this sentiment… If you believe in the value of free markets, capitalism, and the entrepreneur spirit, then I believe you may want to give this service a serious look.

Right now, the collective economies of Southeast Asia are experiencing a transition like the modern world has never seen. Roughly 50% of the world’s population rests in the region of the world experiencing the most dynamic growth. Last year alone these economies accounted for more than half of world GDP. They now churn out 43% of the world’s exports and hold 70% of the world’s foreign exchange reserves.

And while real wages in the developed west are either flat or falling, wages among the up and coming nations of Southeast Asia continue growing.

pennysleuth.com/the-asian-skyscraper-industry/

[JACK-2]

Just incase there was any doubt that western civilization is finished.

[The Big Daddy C-Master]

Eastern economies are definitely becoming more industrious. I wouldn't say that this is a cause, but definitely a symptom.

[JACK-2]

Asia has always fascinated me and I admit I'm about of an asiaphile. I heard sensitive and introvertive people tend to be attracted to Asian cultures because of a more appreciation for those aforementioned characteristics.

[The Big Daddy C-Master]

Aug 11, 2015 10:51:26 GMT -5 JACK-2 said:

Asia has always fascinated me and I admit I'm about of an asiaphile. I heard sensitive and introvertive people tend to be attracted to Asian cultures because of a more appreciation for those aforementioned characteristics.

It makes sense. In America being loud and dumb is worshiped around here.