Rise in skyscrapers possible sign of financial crash
A skyscraper building boom in China and India may be a sign of an impending economic collapse, according to financial experts.
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 Building and 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.
The Asian financial crisis hit as Kuala Lumpur's Petronas Towers were finished in 1997.