Fear the towers.
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 under way, and the current world’s tallest, the Burj Khalifa, built just before Dubai almost went bust.
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.
All of this makes intuitive sense. A boom goes boom and a bust goes bust. Nothing climbs or falls slowly these days, everything happens in swings. So when you see a tall building, expect a steep fall.
There is also this
In a separate report, JPMorgan Chase said that the Chinese property market could drop by as much as 20% in value in the country’s major cities within the next 12 to 18 months.
20% may be optimistic. It depends how many more buildings they can throw up in 6 days.