Barclays Capital points to “unhealthy correlation” between skyscraper construction and financial crashes
There is an “unhealthy correlation” between skyscraper construction and financial crashes, Barclays Capital has said.
Examples include the current world’s tallest building, the Burj Khalifa, built just before the Dubai property crash and the Empire State building, built as the Great Depression was getting under way.
Barclays Capital analysts said: “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.”
Other examples from the bank include Chicago’s Willis Tower (formerly known as the Sears Tower), which was completed in 1974 at about the same time as a global oil shock.
Completion of the world’s first skyscraper in 1873 – the Equitable Life building in New York – also coincided with a five year recession. It was demolished in 1912.
Malaysia’s Petronas Towers in 1997 coincided with the Asian financial crisis, the bank added.
Today’s investors should be most concerned about China, the bank said, which is currently building 53% of all the tall buildings in the world.