"An observatory is a building designed to allow those inside to study the stars, usually with the aid of a telescope. Early observatories consisted of buildings with conveniently-placed windows or high platforms, while later models have sophisticated rotating roofs with an aperture to hold a massive telescope. The rooftop rotates to allow the telescope to point in any direction.
An observatory's location has much to do with its efficacy. Smog and other pollutants cut down on visibility; further, stars become more difficult to observe when there are other light-sources visible; so modern observatories are usually built as far away from cities as practical."
"The Observatory increases a city's scientific research. It is required to build a Laboratory."
In the city screen press the following icon to start Observatory construction: