fb

The bigger they are the harder they fall?

The bigger they are the harder they fall?

What have tall buildings and financial crashes got in common?

Well according to a report by Barclays Capital, there is an “unhealthy” link between the building of skyscrapers and impending financial collapse

Their Skyscraper Index shows an unhealthy correlation between construction of the next world’s tallest building and an impending financial crisis.

They pointed out that the world’s first skyscraper, the Equitable Life Building which was completed in 1873 was followed by a 5 year recession. The Empire State Building was built just as the Great Depression started. Malaysia’s Petronas Towers was built in 1997 which coincided with the Asian financial crisis. The current tallest building in the world, the Burj Khalifa was finished in 2010 and heralded the crisis in Dubai.

According to Barclays, “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”.

They then go on to point out that “Investors should therefore pay particular attention to China – today’s biggest bubble builder with 53% of all the world’s skyscrapers under construction – and
India – which with just two completed skyscrapers, now has 14 skyscrapers under construction”.

Now whilst this may be worrying for people who have invested in the yet to be built skyscrapers there appears to be some reasoning behind this link.

Building a skyscraper takes a huge amount of capital and confidence. Both of these are only really going to be present in a boom time.

It takes several years to construct the buildings so by the time they are complete there is a pretty good chance that the economic cycle will be in a trough rather than the peak when the project was signed off.

Is this a case of the bigger they are the harder they fall?

Share this entry

Recent articles

View All Articles
Splashing marmalade all over?
Jul 11, 2024
Title
Splashing marmalade all over?
Excerpt

Imagine walking into a high-end boutique, expecting the usual scents of lavender and bergamot, only to be greeted […]

Miniature Models, Mega Profits…
Jun 30, 2024
Title
Miniature Models, Mega Profits…
Excerpt

Games Workshop, the iconic British company behind the Warhammer universe, recently demonstrated the profound impact of strategic communication […]

Swimming along nicely…
Jun 24, 2024
Title
Swimming along nicely…
Excerpt

Salmon, once a prized catch by skilled fishermen in cold, rushing rivers and coastal waters, has evolved into […]

You or your boss?
Jun 13, 2024
Title
You or your boss?
Excerpt

So, should you do it or should your boss do it? I’m talking about making decisions and the […]

A takeaway or a fakeaway?
Jun 06, 2024
Title
A takeaway or a fakeaway?
Excerpt

In the final run up to your professional exams it’s often a case of cramming your final revision […]

Peloton’s ride from pandemic peak to rental rebounds
May 30, 2024
Title
Peloton’s ride from pandemic peak to rental rebounds
Excerpt

Whilst home exercise bikes can be a great way to get fit, a lot of people who buy […]

Big 4 under the spotlight…
May 22, 2024
Title
Big 4 under the spotlight…
Excerpt

Recent findings have shown that Britain’s audit firms did not raise alarms for three-quarters of the major companies […]

Better than the professionals?
May 13, 2024
Title
Better than the professionals?
Excerpt

The landscape of investing is evolving, with the rise of retail, or “do-it-yourself” (DIY) investors who are achieving […]