City: A Guidebook for the Urban Age by P. D. Smith

Author:P. D. Smith [Smith, P. D.]
Language: eng
Format: epub
Tags: Travel, bought-and-paid-for
ISBN: 9781608196760
Publisher: Bloomsbury USA
Published: 2012-06-19T04:00:00+00:00

When skyscrapers rise, do markets fall?

The Skyscraper Index was proposed in 1999 by property analyst Andrew Lawrence, who argued that skyscrapers embody the ‘irrational exuberance’ of financial markets. According to his theory, the highest towers are often planned when stock markets are soaring. But by the time construction workers leave, boom has turned to bust. The Empire State Building was completed just after the Wall Street Crash of 1929 and was known as the ‘Empty State’ for many years. The Petronas Towers were finished the year after the Malaysian stock market crashed in 1997. Following the recent global banking crisis, Dubai had to borrow billions of dollars from its neighbour, Abu Dhabi. The Burj Dubai was then hastily renamed the Burj Khalifa, in honour of Sheikh Khalifa bin Zayed al-Nahyan, ruler of Abu Dhabi. The graph plots the heights of super-tall buildings against the rise and fall of the Dow Jones Index, and shows how the construction of ambitious and costly buildings can be used as a key indicator within the business cycle. The lesson, suggests Lawence, is that when skyscrapers rise, we should prepare for a stock market crash.

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