Lin Min

    SHENZHEN is reaching for the sky, literally.

    Ping An International Finance Center Building, which is being built, was expected to be the city’s tallest skyscraper at 660 meters upon its completion in 2015, far above the current tallest, 441.8-meter Kingkey 100 which was completed last year.

    But the Ping An tower may lose its No. 1 ranking even before it is completed. Real estate giant Kingkey is planning to build a 666-meter skyscraper in Caiwuwei, Luohu District, in a massive urban renewal project.

    But even Kingkey’s new height may soon be overtaken. Unconfirmed news reports said China’s sovereign investment fund China Investment Corp. is in talks with the city government to build a 999-meter building in Qianhai, which would be the world’s tallest building if built, surpassing the now tallest 828-meter Burj Khalifa in Dubai.

    While the recent flurry of plans to build skyscrapers in Shenzhen reflects developers’ confidence in the city’s future, we should remain wary of a possible bubble if history is any guide.

    Economists have been fascinated by the fact that booms of constructing skyscrapers have always coincided with economic busts.

    History tends to provide food for thought. The Empire State Building in New York opened as the world’s tallest skyscraper, rising 381 meters high in 1931, just as the Great Depression began to strike the United States.

    In 1997, the Asian financial crisis hit just after the 452-meter Petronas Towers in Malaysia were completed to take the crown of the world’s tallest building.

    Most recently, the Burj Khalifa opened as the world’s tallest skyscraper at 828 meters in 2009, coinciding with the near collapse of Dubai’s economy and the global financial crisis.

    Some people say these links are bizarrely coincidental. But there were similarities in economic situations when these skyscrapers were being built. Easy money and hubris, which can be seen when a bubble forms in any market, were factors that drove the developers to build them, believing the saying “Build it and they will come.”

    These two factors also exist in Shenzhen’s ongoing office building euphoria. A recent report by Colliers International said that in five years Shenzhen will have 111 high-rises taller than 200 meters, more than Hong Kong or Shanghai.

    This points to a possible glut of new supplies of office space and the potential of a bubble bursting.

    The market for office buildings last year was brisk with balanced demand and supply, but new supplies in Level-A offices in 2015 are expected to double those of last year, according to Zhang Xiao-duan, head of the South China Research Department of DTZ, a global real estate adviser headquartered in London.

    With China’s economy slowing down and the housing market bubble starting to deflate, urban planners and developers have every reason to be leery of a property market meltdown. The decline in the number of Shenzheners without a permanent residency permit known as hukou last year should serve as a cue for caution. The first such decline in the city’s history could signal that businesses are being relocated to other cities to lower costs.

    Shenzhen’s lack of land leads to the construction boom of high-rises. But when construction of skyscrapers turns into a heated competition, it is time to be sober.

    (The author is editor of the Shenzhen Daily News Desk.)