The Rude Awakening
Budapest, Hungary
Tuesday, July 24, 2007 ------------------------- - Reaching for the sky in Dubai,
- An distinct lack of underwhelming measurements,
- The second skyscraper boom and plenty more…
------------------------- Joel Bowman, reporting from Hungary… From 2570 BC c. to AD 1300 it was the Great Pyramid of Giza, Egypt. France held the record from 1889 through 1930 with the Eiffel Tower. Then came a flurry of competition for the title of the world's tallest building. The Crystal Building, Aeo Center, Empire State Building, Sears Tower and the John Hancock Center posted impressive heights in the race for the clouds as skyscrapers sprung up all over Asia and the U.S. Now there is a new benchmark. The following headline appeared across the newspapers of the world this past Saturday. "Burj Dubai Now World's Tallest Building" Still growing, the gargantuan structure in Dubai currently soars an astounding 512.1 meters (1680 ft) and can be seen from some sixty miles away. When it is complete, sometime towards the end of 2008, the Burj Dubai will boast an impressive 160 floors, 56 elevators, four swimming pools, a 15,000 square foot gym and a water system capable of delivering 946,000 liters of per day. There are no underwhelming measurements when the subject of discussion is the world's tallest building. Already the Burj has used more than 313,700 cubic metres of concrete and 62,200 tonnes of reinforcing steel. When fully operational, as a structure for both residential and commercial use, Dubai's centerpiece will have comfortable space for 35,000 people. And the Arab world seems to be in quite a hurry, too. It took just 1,276 days for the Tower of Dubai to surpass Taiwan's Taipei 101. While the infrastructure in the aging empire of the United States deteriorates, construction in other parts of the world is, quite literally, reaching for the sky. Read on below as the Free Market Investor's own Chris Hancock takes a look at the unprecedented pace of skyscraper construction in Asia and one industry that is set to reap super-sized rewards as a result. --- Bulletin Board Elite: Approaching Capacity --- The first time, I called it beginner's luck… When it happened again, I called it a coincidence… But after 9 stocks in a "secret" market one ace analyst was screening JUMPED to major exchanges - and major profits - in just a 12-month span, I knew he was hunting in the right place for huge gains. Only a few seats remain in this strictly capped service.
Read on now for more information: Bulletin Board Elite --------------------------------------------------- A Vertiginous High
By Chris Hancock Constructing the Empire State Building consumed 60,000 tons of steel…10 million bricks…1,172 miles of elevator cables…6,400 windows…60 miles of water pipes and over 3,500 miles of telephone and telegraph wires. But the world's tallest skyscraper was much more than the world's top-quality office space. It symbolized the progress of a nation rebuilding - a beacon of economic growth. The strength of its image became universal. One could argue the construction of the Empire State Building was a turning point for the U.S. economy and morale during the heart of the Great Depression, ushering in the world's first skyscraper boom. Soon, skyscrapers began popping up throughout the American landscape: In Atlanta, Dallas, Houston, Charlotte…the World Trade Center in 1972…the Sears Tower in '73. Every U.S. skyline you see today grew in a span of about 40 years. Right now, the world's "second skyscraper boom" is currently under way, and to no one's surprise, it's happening in the newest region of massive economic growth…Asia. These buildings require miles and miles of steel beams… hundreds of thousands of tons of cement… The Twin Towers alone consumed roughly 425,000 cubic yards of concrete… That's enough concrete to lay a sidewalk five feet wide from New York to Washington, D.C. The building also required 12,000 miles of electric cable…198 miles of heating ducts…and 200,000 tons of steel. Few people have ever stopped to think about the massive amounts of steel and cement that go into these structures. But those who did - especially in the early 1900s - could have made a fortune, especially those invested in steel.Between 1904-1930, shares of U.S. Steel (X: NYSE) rose an average of 66% a year! Of all the components used in skyscrapers, steel grasps my interest the most. Steel products are used in everything from the construction of buildings, bridges, railway rolling stocks, industrial pipes and tanks to numerous automobile parts and Campbell's Soup cans. If steel production per person in China alone were to climb to U.S. levels, it would mean that China's aggregate steel use would double by the year 2031, to a level equal to the current consumption of the entire Western world. And when you add in developing countries like India, Malaysia, Indonesia and Vietnam, the numbers become staggering. We'll get to the specific figures in a minute. Unlike the general use we see here in the U.S., high-rise buildings in Asia will provide much more than Grade A office space… These buildings will be the bedrock for the region's rapidly emerging middle-class housing. You may remember the Levittowns that shot up across the United States over 50 years ago. These carefully planned neighborhoods provided affordable housing for the thousands of young soldiers returning home from World War II. But more importantly, these planned neighborhoods served as the new model for America's booming middle-class suburban lifestyle. The emerging markets of Southeast Asia are currently experiencing a similar transformation. Except, they're not peppering the landscape with tree-lined streets and 2.5-bedroom, 1.5-story ranch houses. High-rise apartment complexes are the new Levittowns of Asia. You could easily move into one of these buildings and never find a need to leave. These buildings include everything \from grocery stores and retail outlets to fitness centers with swimming pools. Asian developers are utilizing this high-rise housing model for one specific reason: Land is scarce. Most Asian economies lack the expansive terra firma we in the West find so readily abundant. Take Singapore, for example… It's roughly 3.5 times the size of Washington, D.C., with an economy greater than New Zealand's and a growth rate double that of the United States'. Hong Kong is another example: It's only six times the size of our nation's capital, with an annual GDP on par with Argentina and Portugal. The point is…land is, and always will be, the most valuable asset in places like Hong Kong, Shanghai, Tokyo, Taipei and Singapore. These Asian cities lack the land for urban sprawl we in the U.S. see in places like Chicago, Washington, Houston, Los Angeles, Charlotte and Atlanta. So when you can't build out, you build up. And that's exactly how these Asian economies are making their magnificent growth possible. I travel back and forth to Asia a couple of times each year. Whether I'm in Hong Kong, Bangkok, Shenzhen or Shanghai, the landscape is constantly changing. It's dynamic…exciting…like nothing the world has ever seen. You feel like you're watching a flipbook in real time as thousands of cranes blanket the landscape, lifting I-beam after I-beam to new heights. One ambitious plan calls for a 200-story high-rise on the edge of Hong Kong's Victoria Harbor. That's twice the size of the Empire State Building. The need to build up instead of out also explains why seven of the world's 10 tallest buildings are now found in Asia. And there is plenty of room and desire to build more. Right now, there are 10,498 skyscrapers here in the United States… That's roughly one building for every 28,580 people. China currently boasts 3,603 skyscrapers… approximately 40% of the number of tall buildings in America. That may seem like a lot, especially when you consider China is still in the early phases of economic development. But assuming America represents a mature economy, and assuming the ratio of skyscrapers to people here in the United States represents a logical target rate for further expansion (1:28,580), when you factor in China's one billion-plus people, you find that China thus far has built only one skyscraper for every 362,562 people! To reach our hypothetical ratio of 1:28,580, China would need to construct another 42,102 tall buildings to reach that mark. When you look at the building-to-person ratio of India, the numbers become even more staggering. There is only one building for every 4.1 million people in India! In Indonesia, there's one tall building for every 1.9 million people… In Vietnam, the ratio stands at one for every 3.7 million. The following chart compares skyscraper development here in the United States with the developing countries of Southeast Asia: 
These countries combined would need to construct roughly 100,000 buildings to reach the American model of one tall building for every 28,580 people. And remember, the American "comparison" discounts the Asian demand for residential housing. There are currently 1,322 high-rises, 13% of the total number in the U.S., either proposed or under construction right now in those 11 countries. Total steel production last year equaled 770 million tons. Asian steel production accounted for 66% of that total. Assuming every ton of steel produced in 2006 were set aside for high-rise construction, and assuming current production levels remained stable, it would take roughly five-six years of world production to supply Asia's potential appetite for I-beam and rivet consumption: 
If we just concentrated on Asian steel production, high-rise steel demand would consume between six-eight years of steel production. I believe skyscrapers will be one of the many factors driving Asian steel markets for years to come. [Joel's Note: According to Chris, skyscrapers aren't the only industry devouring steel. "The Asian automobile industry is certainly contributing its fair share," wrote Chris in a recent report for his readers. "The number of vehicles on China's roads has almost quadrupled over the last decade. With a combination of rising disposable incomes and improved transportation networks, the automotive market will continue to soar." If you enjoyed today's insights from our guest editor, be sure to check out his investment service, the Free Market Investor. Details Here: Chris Hancock's Free Market Investor --- The World's Greatest Retirement Stock --- Double-digit returns and income checks…from a secret "pension-payout plan" that's otherwise off-limits to everyday Americans… Click Here For The Full Report --------------------------------------------- By now, the rest of my colleagues should have arrived safely and soundly in Vancouver for the Agora Financial Investment Symposium. Look out for snippets from Canada's southwest in future Rude issues. Addison and Ian will be reporting the news in the 5 shortly, but that's all from us today. Until tomorrow… Cheers, Joel Bowman
Rude Awakening aussiejoel@the-rude-awakening.com | 
