When skyscrapers signal a downturn

It's surprisingly hard to decide on the tallest building in the world. Architects are much like Hollywood stars in their tendency to try to add a couple of sneaky inches. The people at the Council on Tall Buildings and Urban Habitat, who adjudicate on these matters, have had to ban all kinds of Cuban-heel equivalents, from enormous radio masts to metal "guy-ropes" holding up towers that would otherwise collapse in strong winds.

However, their job has got easier with the construction of the Burj Dubai. When it's finished in December, it will take the "world's tallest building" crown simply by dint of being really big. Standing over 800 metres high, it will be at least 290 metres taller than its nearest competitor, the Taipei 101 building in Taiwan. Its success, though, may be tarnished by the fact that it arrives in a very different world to that in which it was conceived. The property market in Dubai has plummeted and we're still stuck in the economic winter.

This won't have surprised analyst Andrew Lawrence. In 1999 the research director at investment bank Dresdner Kleinwort Wasserstein invented something called the "Skyscraper index", arguing that the construction of super-tall buildings is often a sign that an economic downturn is on the way. The best example is the late 1920s, which saw an unprecedented skyscraper boom prior to the Great Depression. The Empire State Building, which was finished in 1929, didn't achieve full occupancy for 40 years. Other examples include the Sears Tower in Chicago, finished in time for the Oil Crisis of 1974, and the Petronas Towers in Malaysia, which appeared after the Malaysian stockmarket went down the plughole in 1997. By the time Canary Wharf was finished in 1991, the London commercial property market was in recession; and the slower pace of building in Britain means our next record-breaking white elephant, the Shard Of Glass in London's Southwark, won't be completed until 2012.

Skyscrapers, then, are the physical embodiment of "irrational exuberance" in the markets. The rule is that if there's enough money sloshing around to pay for one, then don't be surprised if, by the time the purple ribbon's cut, the scissors have to be on hire purchase.