Sunday, January 15, 2012

The Correlation Between Constructing Tall Buildings And Imminent Economic Disaster

China's skyscraper craze 'may herald economic crash'

"China could be the next country to go bust, if its headlong rush to build ever-taller skyscrapers is a guide to its future economic health.

According to a study by Barclays Capital, the mania for skyscrapers over the last 140 years is a sure indicator of an imminent crash.

It points out that the construction boom that threw up New York's Chrysler and Empire State buildings preceded the New York crash of 1929 and Great Depression.

More recently, Dubai built a forest of skyscraping offices, hotels and apartment buildings, including the world's tallest, the Burj Khalifa, before it got into terrible financial difficulties. In 2010 Dubai had to be bailed out by its neighbour, Abu Dhabi, to avoid going bankrupt.

Bar Cap's report said: "Thankfully for the world economy, there is not currently a skyscraper under construction that is planned to overtake the height of the Burj Khalifa."

However, BarCap said the "unhealthy correlation" between construction of the world's tallest buildings and economic crashes was likely to ensnare China, which is home to half of the world's skyscrapers currently under construction.

India, which has just two skyscrapers, sometimes defined as buildings over 240 metres (787ft) tall, is also on the radar after giving the go-ahead to its first skyscraper building boom, with 14 under way, including the world's second-tallest tower in the financial capital, Mumbai.

Andrew Lawrence, director of property research at Barclays Capital in Hong Kong, said: "Building booms are a sign of excess credit."

Lawrence said that historically, skyscraper construction had been characterised by bursts of sporadic, but intense activity that coincided with easy credit, rising land prices and excessive optimism, but often by the time the buildings were finished, the economy had slipped into recession.

China is already showing signs of fulfilling the prophecy. Its largest quarterly business survey showed that confidence among property developers had collapsed to a point where it was worse than the lowest point in the 2008 recession.

More worringly, the same survey revealed that confidence among construction firms, while a little down on the previous quarter, remained bouyant. Capital Economics, the independent analysts, said Beijing's decision to pump hundreds of billions of dollars into construction projects, bypassing private developers, has prolonged the building boom and potentially stored up a bigger crash.

Even funds pouring into residential schemes are at risk following years of high-rise developments near factories and businesses dependent on the west for trade. A recession in Europe that drags the rest of the world into a period of lower growth will hurt Chinese exporters, jobs and demand for property.

BarCap said signs of trouble were escalating in China and India. China had the dubious distinction of being the world's "biggest bubble builder," as it erected ever more and higher towers, it said."


Blogger Concepts For Building said...

Thank you for allowing me to post this comment on your site which I think is very well done. If visit mine and post a comment I will approve it thereby providing a link back to yours.

Concepts For Building
pre-engineered metal buildings shipped nationally and internationally

22/1/12 7:09 AM  
Anonymous Anonymous said...

Excellent post. I was checking continuously this blog and I'm impressed! Very useful info specifically the last part :) I care for such info much. I was seeking this certain info for a long time. Thank you and good luck.

Look at my site ... section 21 notices

17/5/13 5:01 AM  
Anonymous Anonymous said...

It's very easy to find out any matter on web as compared to books, as I found this post at this web Site.

17/5/13 5:37 AM  

Post a Comment

<< Home

Cost of the War in Iraq
(JavaScript Error)
To see more details, click here.