Kingdom Tower - Impact

Impact

The recent announcement of the tower has provoked widespread and highly divided reaction throughout the media. Those who support the project see it as an investment that, although visionary, will have positive social and economic effects on the area as well as the country in the long term, while others see it as nothing more than the result of self-centered and attention seeking competition between oil-rich gulf nations that will serve no purpose other than as a white elephant, costing more and generating less than expected, if it even gets built.

“The race to build the highest skyscraper is quite futile –where do you stop? These buildings are a symbol of an old-fashioned way of thinking.”

— Rory Olcayto, deputy editor of The Architects' Journal speaking negatively of the project.

There is an impending real estate boom in Saudi Arabia, with increasing demand and rising prices due to high population growth and a short supply of housing, which may include a demand for high-end luxury units, such as those in Kingdom Tower. To boost growth, the Saudi Arabian government is going to invest US$67 billion (SR251 billion) in building 500,000 homes throughout the country. According to Saudi officials, about 900 new homes are needed a day to meet the demand of the rapidly growing population, which has nearly quadrupled in the past four decades. Kingdom Tower is also an attempt to diversify Saudi Arabia's economy, which, holding a quarter of the world's oil reserves and being one of the founding OPEC nations, is currently largely dependent on its crude oil exportation, which accounts for nearly 75% of government revenues and 90% of exports. This generates enough income to support Saudi Arabia as a welfare state, which spends billions of dollars on job creation and housing for its lower income residents.

“...this tower symbolizes the Kingdom as an important global business and cultural leader, and demonstrates the strength and creative vision of its people. It represents new growth and high-performance technology fused into one powerful iconic form.”

— Adrian D. Smith, designer and architect, Kingdom Tower

Just as the Kingdom Tower will complement the Kingdom City development that will be built around it, there are many infrastructure and revitalization projects underway and planned throughout Saudi Arabia, such as the US$7.2 billion (SR27.1 billion) new airport terminal under construction at King Abdulaziz (Jeddah) International Airport, that will complement the Kingdom City as well as develop Saudi Arabia, which has been likened to a Third World country with crumbling infrastructure and widespread disasters, including severe flooding, such as the flash floods in early 2011 that damaged 90% of the roads and over 27,000 buildings in Jeddah. According to a representative of Standard Chartered, which invested US$75 million in Saudi Binladin Group, Saudi Arabia is going to spend over US$400 billion (SR1.5 trillion) on infrastructure over the next few years. According to reports by Citi Investment Research & Analysis, $220 billion worth of development, accounting for 36% of all construction spending in the MENA region, will be directly or indirectly beneficial to Kingdom Tower. Kingdom Tower and City themselves are intended to set an example of green development, using modern technology and having a low carbon footprint relative to the number of people they will support. However, there is also an increasing problem of poor education levels in Arab countries due to a lack of spending in research and education, which it is argued should be invested in rather than building skyscrapers, and that the tower is nothing more than a symbol of hubris. It has even been likened to the Tower of Babel.

“Building this tower in Jeddah sends a financial and economic message that should not be ignored. It has a political depth to it to tell the world that we Saudis invest in our country.”

—Al-Waleed bin Talal, Prince of Saudi Arabia and visionary behind Kingdom Tower

Furthermore, economists have found large new skyscrapers to be a negative economic indicator, with several incidences of new tallest buildings being finished and opening into a bad economy, as they generally start during a financial boom when money is easy and investment is strong, but do not finish until the bubble has burst. Examples include the Singer Building and Metropolitan Life Insurance Building after the Panic of 1907, 40 Wall Street, the Chrysler Building and the Empire State Building built during the Great Depression, the World Trade Center and Sears Tower built during the 1970s economic downturn, the Petronas Towers built during the Asian Crisis and Contagion of the late 1990s, and the Burj Khalifa built during the late-2000s recession. Much of the study on this phenomenon was done in 1999 by Andrew Lawrence, a research director at Deutsche Bank who created the "skyscraper index," originally as a joke, but that illustrated the very real fact that many of the world's tallest buildings have been built on the eve of financial collapse.