Strong Correlation between Skyscrapers and Financial Crashes

January 12, 2012 in Daily Bulletin, Signature

Researchers at Barclays have found a strong relationship between the building of skyscrapers and the incidence of subsequent financial crashes. The BBC reports that:

  • Examples of this phenomenon include: The Empire State Building which was built around the time of the Great Depression; Dubai’s Burj Khalifa built as the country almost went bust; The first skyscraper in history: The Equitable Life Building built in 1873 and demolished 39 years later; The Sears Tower and an oil shock; Malaysia’s Petronas Towers and the Asian Financial Crisis.
  • Next up on the danger list are China which is currently the biggest builder of skyscrapers, and India which is building 14 of them. London is also currently constructing The Shard, a skyscraper that will be the tallest in Western Europe.
  • Analysts at Barclays argue that the reason for this phenomenon is that: “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”

Read more about what this could mean for the future of China as well as other developing countries over here.

Source: The BBC