Why Korea’s Top Builders Have Given Up on Building the World’s Tallest Skyscraper

South Korean construction companies have withdrawn their bids for Saudi Arabia’s new landmark building, the Jeddah Tower, which stands at a height of 1 km. Consequently, construction firms from China or Europe are expected to build the tower. Why did these companies, known for their high technical capabilities, abandon constructing the world’s tallest building?

Last October, Saudi Arabia opened bids for constructing the world’s tallest building and recruited multiple companies. At that time, Samsung C&T, Daewoo E&C, and Hyundai E&C from South Korea announced their participation. Following this, multinational companies from China, Sweden, Egypt, and local companies jumped into the competition.

JEC, the client for the Jeddah Tower, issued invitations to selected bidding companies. The Jeddah Tower, a skyscraper exceeding 1 km, is expected to be 168 stories high and 1,008 meters tall. The estimated construction cost is around $1.23 billion.

The Jeddah Tower will be 172 meters taller than the current tallest building in the world, the Burj Khalifa in Dubai. Samsung C&T, which participated in constructing the Burj Khalifa, has been globally recognized for its technical prowess.

Saudi Arabia has been planning the Jeddah Tower, a skyscraper, since the 1950s. Due to the ground’s inability to withstand the weight of the initially planned building exceeding 1,600 meters, the height was lowered to 1,008 meters, and construction began in 2013. The Saudi Bin Laden Group, a company established by the father of terrorist Osama bin Laden, was in charge of construction and was built up to the 70th floor, approximately 200 meters high.

However, construction of the Jeddah Tower was halted in January 2018 when Crown Prince Mohammad bin Salman began a significant purge of opposition forces. Although attempts were made to restart construction, companies are hesitant to bid.

Earlier this year, Samsung C&T, Hyundai E&C, and Daewoo E&C did not respond to the bid for the Jeddah Tower. According to the construction industry, Hyundai E&C and Daewoo E&C gave up bidding. It has been a long time since Saudi Arabia halted construction due to local conditions, and even if construction resumes, there is no clear business potential.

On the other hand, it is known that Samsung C&T also had internal debates about giving up the title of “tallest building constructor” it acquired when it built the Burj Khalifa. Still, it did not bid because the economic and political risks were deemed too high when viewed from a business perspective.

An industry official explained, “Securing the contract to build Jeddah Tower, the world’s tallest building, would grant the title of tallest building contractor, but the risks associated with resuming a previously halted project make participation difficult.”

Various economists and researchers have noted the correlation between the construction of tall buildings and economic crises. This is often explained through the Skyscraper Index, which suggests that the construction of tall buildings is usually associated with economic downturns or financial crises.

This concept was first proposed by Andrew Lawrence in 1999. It suggests that the construction of skyscrapers occurs during periods of economic overheating and can lead to economic imbalance due to excessive investment in large-scale projects. Furthermore, it warns that the economy may be in recession when the skyscraper is completed.

This suggests that the economy’s peak and skyscrapers’ construction coincide. However, the economic cycle may change by completion, preventing the project from generating sufficient profits. For example, the construction of the Burj Khalifa in Dubai began in January 2004 but was completed in 2010. This was just after the global financial crisis, and Dubai suffered a significant economic blow as the real estate bubble burst.

For these reasons, South Korean construction companies have given up biddiArabia’saudi Arabia’s tallest building, which has been halted once and requires long-term construction. According to foreign media, in May, JEC, the developer of the Jeddah Tower, appeared to be restarting construction. However, no specific construction company has been announced yet.

As a result, interest is growing in the construction company that will participate in the construction of the Jeddah Tower, which will be the tallest building in history.