Architecture's Reality Check Global Downturn Dooms Prestige Construction Projects

The financial crisis has led to the cancellation of spectacular construction projects in the previously booming metropolises of Dubai, Moscow and Abu Dhabi. Does the demise of overblown architecture spell an opportunity for sustainable building?

They were certainly heady years. In cities like Shanghai, Moscow and Dubai, the urban landscape was re-invented at breakneck speed. Revolving construction cranes dominated skylines and economic growth was measured in the number of stories a building had. It was a high-stakes gamble involving money, steel and glass.

In the new urbanism, nothing could happen quickly enough, nor could anything be praised loudly enough. Numerous entities had their fingers in the pie of each major deal, from banks to investors to brokers. There were no limits to the business savvy and the flows of capital involved.

Anything seemed possible. Every new building was supposed to a superlative, so that it could serve as visible proof of enormous economic power. Yearnings for pomp and prestige were transformed into architecture. Some designs were reminiscent of perfume bottles, others of rockets.

But now the enormous real estate bubble of the sheikhs, oligarchs and neo-capitalist financiers has burst. The international economic crisis  has caught up with the nouveau-riche high flyers in the Middle East and Asia who, until recently, had gloatingly watched the collapse of the West, where one skyscraper project after the next has been abandoned. But now the brakes are also being put on one construction project after another in Dubai, Saudi Arabia and Russia.

The globalized world is truly proving to be a single entity, one in which the collapse of the market affects everyone. There is suddenly a lack of credit or demand -- often both -- for the countless square meters of newly constructed office, retail and residential space. And the construction moguls have been nervous for a long time.

One of the centers of the new era was Dubai, a city on the Persian Gulf with no history, no special mineral resources, but with a seemingly unlimited future. Dubai was a promising real estate mirage which gradually became reality. Its mantra of "build it and they will come" worked for years. The masters of Dubai even created new luxury building sites by developing artificial islands in the shape of palm trees. Two groups of islands are already complete, but a planned third group is now likely to be put on hold.

An event held in Dubai one Friday in December showed just how different things are looking in the Gulf city these days. The invitation revealed, as usual, only the most important details. Aiman Holding planned to unveil a project it called "The Twelfth," consisting of a high-rise residential building on one of the palm islands. The event was to be held at the five-star Raffles Hotel. Guests would apparently only be allowed entry if they presented a copy of their passport and checkbook.

Ordinarily, it would not have taken any more than that to fill a ballroom in Dubai with real estate investors. They came by the dozens whenever a new real estate developer appeared on the scene, and by the hundreds when an established vendor announced that it was accepting bids for a luxury residence, an office tower or a shopping mall. There were times when speculators in suits and ties would camp out in the lobby to be the first to place their orders.

That might have still been the case in October, but not today. At 11:30 a.m., an hour and a half after the beginning of the event, 10 real estate agents are sitting alone at their tables. The model of the residential high-rise looks abandoned next to the opulent, untouched buffet. There was no deluge of customers. No one was interested in the penthouse pool, the four-story garage or the private beach with a view of the Dubai skyline.

Developers are quietly removing one project after another from the market. Donald Trump's $600 million (€438 million) Trump International Hotel and Tower on the Palm Jumeirah island has been "postponed." A 1,000-meter tower being planned by the partly state-owned real estate development company Nakheel is "under review." And the new Jumeirah Gardens neighborhood, with a planned total investment of $100 billion (€73 billion), has also been "postponed."

The tallest building in the world is still under construction in this ambitious emirate. The Burj Dubai ("Dubai Tower") is a mixed-use tower which will be more than 800 meters (2,624 feet) tall when completed. But by the time of the dedication ceremony planned for next fall, will its roughly 200 stories still be needed? Won't the market in Dubai, famous for its insane profit margins, have imploded long before then?

In some high-rise apartment buildings in Dubai, only a few apartments are occupied so far -- a fact that becomes particularly noticeable at night, when the lights are on in only a few windows. "Wait a while before buying real estate in Dubai," says a broker at his real estate booth in the "Mall of the Emirates," his voice lowered. Another bad sign is that The Brasserie restaurant in the Arabian Park Hotel began serving free lunches to Dubai's new unemployed in mid-December. Most of those who come are real estate brokers -- yesterday's resourceful gold-diggers dining in soup kitchens today.

Similarly glum news is coming from the real estate markets in Qatar, Bahrain, Kuwait and even Saudi Arabia, the heavyweight on the Gulf. The King Abdullah Economic City, a new 170-square-kilometer (65-square-mile) commercial, residential and industrial city being built in Saudi Arabia 100 kilometers (62 miles) north of the city of Jeddah, is having trouble finding international investors, the development company Emaar conceded.

It is hard to believe that the region was experiencing a boom of Babylonian proportions until very recently. The value of projects under construction or in planning in the United Arab Emirates and Saudi Arabia alone amounts to well over $1 trillion (€730 million).

Until recently, the Saudis envisioned an unbelievably tall structure for the port city of Jeddah: a giant of a building stretching more than 1 kilometer (3,280 feet) into the sky. But now falling oil prices have taken their toll on the real estate industry, and it is now questionable whether the developer, Kingdom Holding, will ever build the giant tower.

These are only the first signs of what could lie ahead: a long-term economic slump for high-flying construction projects in countries where officials recklessly relied on revenues from the sale of mineral resources, borrowing against their oil and natural gas reserves. As prices have come down, plans have been cancelled or put on hold.

Those who can are trying to put on a brave face. In Abu Dhabi, the young Stuttgart-based Lava architecture firm has been commissioned to build the Michael Schumacher World Champion Tower, a dynamically shaped structure which, at 250 meters (820 feet), is almost modest in its scale.

The groundbreaking ceremony was scheduled for next month. But now, says Alexander Rieck, one of the directors at Lava, it has been postponed until March, April or possibly even later. He insists, however, that this is no cause for concern. "A few weeks ago, they were still saying that we should not delay the start of construction, because prices were going up from one month to the next," he says. "But now prices are falling, and any delay simply reduces the cost of the project."

But is "delayed" just a euphemism for cancelled? No architect, investor or emirate is likely to willingly release news of cancelled skyscraper projects or abandoned construction sites. Nevertheless, Abu Dhabi, with its oil reserves, is still in a stronger position than Dubai.

Back to the Drawing Board

Another example is Russia and its economic miracle. In Moscow's new Moscow City district -- Europe's biggest construction project -- a skyscraper called Rossiya ("Russia") was in the planning stages. When finished, it was intended to serve as a proud symbol of the country's resurrection and prominence. The architectural concept was straightforward: "Three skyscrapers in one."

The world-renowned and award-winning British architect Lord Norman Foster designed the future landmark. At 612 meters (2,007 feet) and with 118 stories, Foster's slim tower was to be Europe's tallest building.

Recently, however, the developer, Russian Land, announced laconically that it planned to "freeze" the construction of the über-skyscraper because of the crisis. And Foster's fame is a currency that is suddenly worth nothing in this game. Instead of gazing at dizzyingly tall buildings, Muscovites now look at an ugly wasteland of a construction site.

A few months ago, Shalva Chigirinsky, the head of Russian Land, pointed out that Moscow, as a "gigantic city with a colossal turnover of money and people," needs such mega-projects. But he has become reticent since the crisis reared its ugly head. Although Chigirinsky insists that construction of the skyscraper is only "temporarily" on hold, he doesn't know when it will be resumed.

Now Chigirinsky must also do without another prestige project from Foster's drawing board. Crystal Island, a glittering, 450-meter (1,476-foot) pyramid, was meant to beautify Moscow with 2.5 million square meters (27 million square feet) of luxury space. But then the developer lost his financial backing for the mega-project, a joint venture with the city government with a projected cost of $4 billion (€2.9 billion). Moscow Mayor Yuri Luzhkov is now desperately seeking a new investor for Crystal Island -- so far unsuccessfully.

The competition is still trying to look active. Mirax Construction, which earned a handsome $1.3 billion (€950 million) in revenues in 2007, is building the Federation twin towers in the Moscow City development. They are designed to be 240 and 350 meters (787 and 1,148 feet) tall.

Mirax CEO Sergei Polonsky has the biggest mouth of all of Moscow's construction magnates. Nevertheless, if he has no comment on the current situation, it is ostensibly for only one reason -- a building freeze is simply not an issue for him, he says. The Federation Tower, designed by Sergei Tchoban, a German of Russian descent, and the Hamburg native Peter Schweger, is scheduled to be dedicated in 2012.

Nevertheless, Schweger, in faraway Hamburg, speaks candidly about the economic situation in Moscow: "It's a house of cards that is built on Western loans and which is now collapsing." Is the dream of a new, golden Russia already a thing of the past?

China, more than ever, is now clearly setting the pace. Twenty new large cities are founded in the People's Republic each year. The Dutch architect and urbanist Neville Mars speaks of a "Chinese speed" -- and of the fears this architectural megalomania has sparked in the rest of the world.

But even China is increasingly feeling the effects of the financial crisis. Its exports have already dropped sharply, economic growth is declining and all forecasts for the enormous country point to a significant downturn.

This also means bad news in the construction sector. In Macau, the southern Chinese gambling mecca, a developer from Las Vegas pulled out of a costly hotel construction project. In Beijing, the Hong Kong-based Swire Group cancelled a portion of its new shopping and restaurant center known as The Village. But given the large number of projects on the drawing board in China, some white elephants are bound to be cancelled before construction begins -- something that was already true in previous years.

Other prestige projects are still underway. For example, in late November, workers in the financial center of the Yangtze River metropolis of Shanghai began building one of the world's tallest buildings. The Shanghai Tower, which will stand 632 meters (2,073 feet) tall when complete, is projected to cost $2.2 billion (€1.6 billion). Gensler, an American architecture firm, designed the helical tower, which will capture rainwater for its bathrooms and will generate electricity using wind turbines -- enough to power the building's exterior lighting, at least.

There is little risk that the developers will run out of money for the tower, because all three companies are government-owned. The government will also find tenants for the building in the future -- by compulsion if necessary. "The three shareholders are the city's strongest government-owned businesses, with assets of hundreds of billions of yuan," says Gu Jianping, the president of the construction firm managing the project. "This guarantees that the project will progress favorably."

China's strategy for coping with the crisis is different from that of other countries. The Chinese are simply building in the face of the crisis -- no matter what the cost. In other words, in China a crisis manifests itself not in stasis, but rather in the government blindly taking action simply for the sake of doing something.

Frankfurt urban planner and architect Albert Speer was one of the first Germans to be awarded major contracts in China. He too is under the impression "that the Chinese are even stepping on the gas and ratcheting up their speed to keep the domestic economy going."

But for how long can the Chinese afford such a stimulus program?

The rules in this speculative poker game have been invalidated worldwide, and no one knows how long it will last. The question of what is being built will probably be followed by the question of how buildings are built. In other words, the real estate crisis will shake up architects' careers. This is especially true of the luminaries in the industry, whose services have been snapped up for princely sums around the world in recent years. Their calling card was often the dramatic impact of their buildings, while they paid less attention to practical aspects like environmental compatibility and sustainability.

For those who still have the money, skyscrapers remain a means of showing off. "In many cases, developers still favor highly symbolic, even heroic architecture," says Frankfurt architect Jürgen Engel of the firm KSP Engel and Zimmermann. This, according to Engel, is an aesthetic that is not based on functional or economic principles. Nevertheless, he is convinced that a paradigm shift will invariably follow. "For many people, this crisis is a blow. In the future, everyone will think carefully about how they invest their money."

Is the crisis an opportunity for architecture? The jury is still out.

The fact that the rich, Western industrialized nations have at least begun looking at environmentally compatible construction suggests that there is a relationship between affluence and an environmental conscience. But this relationship does not apply in the suddenly prosperous East, where building has been and remains a matter of -- often eccentric -- taste, rather than sustainability. Everything emits an aura of waste, the costly chic of excessive scale.

Whether in Shanghai to Moscow, everything about a prestige construction project should be unique, nothing should resemble an ordinary tower block. The Trump hotel project in Dubai, which has been shelved for now, was touted as a sculptural attraction under the slogan: "Greater Height, More Drama, Unmistakable Presence." Size was no object: The skyscraper-cum-artwork is supposed to be centered around a giant open core.

Many architects, including the stars in their midst, helped concoct this environmentally unfriendly symbolism in urban planning in the first place by designing skyscrapers in the shape of desert roses and walkie-talkies.

In addition, there was great demand in some cities to play catch-up by building more or less prestigious residential and commercial buildings. Developers were in a hurry, and they were eager to keep investments low and profit margins high. No one was interested in the concept of sustainability that was being discussed in the West, at least. Sustainability is costly and time-consuming.

Western architects find fault with the low quality of many buildings in the luxury-obsessed Emirates, for example, especially the poor composition of the concrete used in their construction. As a result, many structures, including skyscrapers and prestige buildings, will essentially have to be torn down after a few years. And anyone who pays so little attention to getting the concrete right is unlikely to be concerned about energy-hungry air-conditioning systems and other environmental nasties.

Does this mean that the crisis will at least awaken a green conscience, because environmentally responsible construction spells cost savings in the long term?

Like Jürgen Engel, his Stuttgart colleague Alexander Rieck believes that a corresponding shift is taking place, and that the quality debate will begin after the "big market reassessment." According to Rieck, "the signs of the times are clear, and the environment is becoming increasingly important worldwide."

Perhaps the deceleration brought on by the financial crisis will trigger a change in attitudes. Perhaps the energy-saving factor will be the strongest selling point in the future, and perhaps a new aesthetic of environmentally friendly simplicity will develop as a result. Or maybe not.

Such good intentions could be quickly forgotten by Russia developers and Arab sheikhs once the economy gets going again, and when, once again, money appears to be no object. Then the urbanization of the world will be resumed at a record pace.

The architecture museum in Munich's Pinakothek der Moderne, a modern art museum, is currently exploring the phenomenon of the city in an exhibition. It has even proclaimed the current century to be the "Century of Cities."

Since the beginning of the modern era, the curators write in the exhibition's catalog, the idea has existed that the world can be shaped by humanity, and that the rational intellect can design a rational environment. But it is human beings themselves who are far too irrational, as the chaos in the financial markets has demonstrated only too persuasively.


Translated from the German by Christopher Sultan