There is an "unhealthy correlation" between the building of skyscrapers and subsequent financial crashes, according to Barclays Capital. Examples include the Empire State building, built as the Great Depression was underway, and the current world's tallest, the Burj Khalifa, built just before Dubai almost went bust.As I noted in an earlier post, all civilizations build their greatest structures on the eve of collapse.
China is currently the biggest builder of skyscrapers, the bank said. India also has 14 skyscrapers under construction.
"Often the world's tallest buildings are simply the edifice of a broader skyscraper building boom, reflecting a widespread misallocation of capital and an impending economic correction," Barclays Capital analysts said.
The bank noted that the world's first skyscraper, the Equitable Life building in New York, was completed in 1873 and coincided with a five-year recession. It was demolished in 1912. Other examples include Chicago's Willis Tower (which was formerly known as the Sears Tower) in 1974, just as there was an oil shock and the US dollar's peg to gold was abandoned. And Malaysia's Petronas Towers in 1997, which coincided with the Asian financial crisis.
The findings might be a concern for Londoners, who are currently seeing the construction of what will be Western Europe's tallest building, the Shard. That will be 1,017ft (310m) tall on completion.
Skyscrapers 'linked with impending financial crashes'
A skyscraper building boom in China and India may be a sign of an impending economic collapse, according to financial experts.Need more evidence? Here's Exhibit A - a 140-story tower in the Republic of Georgia(!!). You may recall Georgia as the place where an elderly pensioner cut off the entire country of Armenia while scavenging for copper to sell as scrap. I'm guessing she won't be going here: The Ad Astra (Latin: to the stars) Tower:
Barclays Capital has mapped an "unhealthy correlation" between construction of the world's tallest buildings and looming financial crises over the last 140 years, including the Great Depression and the Asian financial crisis.
Today, China is home to over half the 124 skyscrapers now under construction worldwide.
India, which has just two skyscrapers, is building 14, including the world's second tallest tower, in the financial capital Mumbai.
Barclays said the clusters of building activity usually coincide with periods of easy credit, excessive optimism and rising land prices, which often occur before market corrections.
"Building booms are a sign of excess credit," Andrew Lawrence of Barclays Capital in Hong Kong, said.
Historically, skyscraper construction has been characterised by bursts of sporadic, but intense activity that coincide with easy credit, rising land prices and excessive optimism, but often by the time skyscrapers are finished, the economy has slipped into recession, Mr Lawrence said.
The Great Depression hit as the finishing touches were being put on three record-breaking buildings in New York: 40 Wall Street, the Chrysler Buildingand the Empire State Building, which were all completed between 1929 and 1931.
The economic and oil crises of the 1970s coincided with the completion of the twin towers at New York's World Trade Centre, in 1972 and 1973, and Chicago's Sears Tower in 1974.
The Asian financial crisis hit as Kuala Lumpur's Petronas Towers were finished in 1997.
Dubai's $4.1bn Burj Khalifa, completed in 2010, is now the world's tallest building. As it was being built, Dubai nearly went bust and the world slid into the Great Recession.
"Thankfully for the world economy, there is not currently a skyscraper under construction that is planned to overtake the height of the Burj Khalifa," the report said.
However, signs of trouble are escalating in China and India.
Today, China has the dubious distinction of being the world's "biggest bubble builder," as it erects ever more and ever higher towers, Barclays said. Home to 53% of the 124 skyscrapers now under construction globally, China is primed to increase its stock of skyscrapers by 87%.
About 80% of new buildings are going up in tier two and three cities, away from developed coastal areas of the Pearl River Delta and Yangtze River Delta, which Barclays called "evidence of the expanding building bubble."
Mr Lawrence said China's property market is already wobbling.
The number of residential property sales has decreased 40 to 50% in Beijing and Shanghai and developers have slashed prices 5 to 20%, he said.
India takes top honours for hubris: The second tallest building in the world, the Tower of India, is now under construction in Mumbai.
Non-performing loans in India - a substantial number of them to property ventures - grew by nearly a third in the first half of this fiscal year, more than triple the average annual growth rate since 2006, according to the Reserve Bank of India.
Asia skyscraper building boom may be sign of impending economic collapse, warn experts (The Independent)
I mean, seriously, can anyone not see this crash coming? This seems like an opportune moment to post this intelligent piece of architectural criticism of Europe's new tallest building: London's Shard: a 'tower of power and riches' looking down on poverty (The Guardian).
In all, there will be 27 floors of offices, three floors of fine dining restaurants, an 18-floor, five-star Shangri-La hotel with a spa, and 10 palatial apartments, each on average seven times bigger than a semi-detached home. A four-storey public viewing area is being built starting on the 68th floor which is likely to cost around £20 to access. The developer is even considering renting out the very highest room on the 78th floor for high powered conferences and political talks – summits at the summit.
"We could send Europe's top politicians up there and not let them down until they solve the euro crisis," said Irvine Sellar, the building's developer.
The architect, Renzo Piano, has mooted an alternative use as a meditation suite and is said to be keen the space should not become a playground only for the super-rich and powerful.
But how does all this, rising beside some of the poorest wards in the country, add up in Britain's listing economy? It is notable that so far no office tenants have signed up, although the developers say they are in talks with several and are being selective. The answer may lie in its ownership - the Shard owes its existence to a power play by a gas-rich kingdom more than 4,000 miles away.
From spring 2009, when construction began, Qatari wealth poured into the project. As the global economic crisis forced builders to down tools on sites across the UK, around £1.5bn – mostly from the Gulf – bankrolled the Shard.
Two of the apartments span two entire floors each and are expected to become London homes for members of the Qatari royal family. The Shard – 80% owned through the country's central bank – is now the jewel in the crown of the emirate's growing London estate, which also includes Harrods, the American embassy building in Grosvenor Square, and Chelsea Barracks.