THERE are plenty of candidates, from the ghost estates of Ireland to the foreclosure signs on American homes. But as a symbol of the property cycle that still distorts the world economy, the Burj Khalifa in Dubai (pictured above) takes some beating. The world’s tallest building is literally built on sand. Its height, at half a mile (838 metres), violates a basic rule of commercial property: when land is plentiful, build outward to use up as much of it as possible. The building opened in January 2010, just weeks after the emirate announced a standstill on debts largely incurred on glitzy property projects. Its name was hastily changed from Burj Dubai to Burj Khalifa to honour the ruler of Abu Dhabi for sending bail-out funds to its fellow emirate. A year on, tourists cluster at its base to take photos or to visit the observation deck; inside, many of the flats lie empty.
Dubai’s record-breaker is also a powerful emblem of forgetfulness. According to Andrew Lawrence of Barclays Capital, the construction of exceptionally tall buildings is a reliable indicator of economic crises in the making. From the time the first skyscraper went up—the Equitable Life Building in New York, in 1870—to the completion of the Empire State Building (1931) and the World Trade Centre (1972) in the same city and the Petronas Towers in Kuala Lumpur (1998), great height has usually coincided with big trouble.
Mr Lawrence’s theory is not perfect, but it feels right. Property moves in cycles, and the more ambitious the scale of construction on the way up, the steeper the drop on the way down. A sharp turn in the property cycle is a serious matter. The five big banking blow-ups in the rich world before the latest crisis (Spain in the 1970s, Norway in the 1980s and Sweden, Finland and Japan in the 1990s) had property at their heart. Banking crises in the developing world have also tended to happen at the peak of housing booms or just after a bust in prices.
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