Is the Chinese skyscraper boom excessive?

Abstract

ABSTRACT According to the Council on Tall Buildings and Urban Habitat, more than half of the skyscrapers completed in recent years, i.e., buildings taller than 200 meters, were in China. In fact, China has been undergoing a dramatic skyscraper boom since the early 2000s. Some claim that this boom is excessive. We examine this claim through two sets of analyses. First, we test whether developers or cities engage in height competition to build taller buildings. Theoretical models demonstrate that such competition results in excessive building height. We find some indications of height competition among Chinese cities. We find concrete evidence for height contests within cities. Second, we build a panel regression model to identify cities where growth in skyscrapers exceeds the trajectory predicted by economic fundamentals. Even though such a model cannot definitely establish whether these cities are building skyscrapers excessively, the results are useful in informing policymakers and developers of potentially higher risks in these cities. Our results suggest that Tier-1 cities are likely less risky than lower-tier cities.