Binladen Group to build world’s tallest tower in Jeddah, Saudi Arabia
Posted on 02 August 2011 with 1 comment from readers
Binladen Group has just been awarded a $1.2 billion contract to build a 1-kilometre high tower in Jeddah, Saudi Arabia, set to be twice as high as the world’s current tallest building, the Burj Khalifa in Dubai.
Saudi multi-billionaire investor Prince Alwaleed’s Jeddah Economic Company will be the owner of the Kingdom Tower that is to be the focal point of a $27 billion property scheme in the Saudi commercial capital known as Kingdom City.
Burj Khalifa architect
Last October Adrian Smith, the designer of the Burj Khalifa was selected as the architect for the Kingdom Tower. Saudi Binladin Group will take a 17 per cent stake in the development company with Prince Alwaleed and Abrar International both taking a third of the stock and the 17 per cent balance belonging to Abdurrahman Sharbatly, according to a company statement.
Is this back to the curse of the world’s tallest building? This suggests that the completion of such a building marks the top of of economic boom as so it proved for Dubai with the Burj Khalifa.
If so then the Saudi Arabian economic boom is only just starting with GDP growth forecasts upped to seven per cent for 2011 on the back of $125 billion in additional spending on housing and welfare projects.
Saudi Arabia is estimated to be making an extra $1 billion a week this year from higher oil prices and oil revenues will be the highest ever in the history of the Kingdom at around $267 billion.
Welcome to the second oil boom of the 21st century. The Arab Spring has brought a bonus of higher and higher oil prices due to the political risk premium and the loss of 1.5 million barrels per day from Libya that Saudi Arabia has replaced, upping output to the highest ever levels. Monetary inflation has also boosted commodity prices.
Of course the Binladen Group, the same familly as the infamous terrorist shot dead last month, will be subcontracting much of the work on this epic project. Dubai’s Emaar Properties, developer of the Burj Khalifa is to manage the development, although it is not clear what this will mean in terms of profits for the quoted group.
Negative signal?
But sometimes just starting construction of the world’s tallest building can be the signal for a market collapse. For example, the building of the Empire State building in New York started after the Wall Street crash signalled the Great Depression years, although nobody knew that at the time.
It would take a second global economic crisis of massive proportions – perhaps coming out of Europe like the post-1931 economic slump – to derail the second oil boom of the 21st century. Or what if China crashed?
Could that happen? It is far more likely that the developed and emerging markets will muddle through this crisis and continue to consume more oil than the world can produce. That will keep oil prices high.
Saudi Arabia will therefore trump Dubai with the world’s tallest building within five years or so.
1 Comment posted by readers:
Any building over about 90 floors is an inefficient waste of money. And imagine if an enemy country sent a few cruise missiles into the 12th floor. It had better be fireproof and have a way to prevent the smoke from spreading.
Oil prices will fall a little if the world economy falls off the rails, but will recover rapidly, within a couple of years at most.
Ed Note: Well it will take five to six years to finish this tower and they have not yet started. Perhaps by then the world will come up with a new energy source? Mind you that is what we thought in the late 70s!! Saudi Arabia and the UAE are both investing heavily in nuclear power because it is cheaper than oil which they can then export.