In 1999, at the outset of the greatest real estate bubble in world history, Andrew Lawrence developed his amusingly interesting ‘Skyscraper Index’. It put the proposition that the construction of the world’s tallest building presages economic collapse.
Lawrence’s index is a more superficial treatment of the case British journalist/economist Fred Harrison developed for an 18 year peak in land values, building cycles and economic recessions in his 1983 study “The Power in the Land: Unemployment, the Profits Crisis and the Land Speculator”.
Harrison was acknowledged to be the first economist to have forecast the current global financial collapse (GFC), pinpointing it as early as 1997.
I’ve also touched upon how cityscapes provide insights into property-directed booms and busts.
Just as the Burj Dubai was the harbinger of the GFC, the skyscrapers in course of construction on the skylines of China and India do undoubtedly herald the financial disintegration of the world’s two most populous nations.
It doesn’t have to be this way. A recessionary crisis is not a necessary outcome from a period of boom and prosperity.
The economists of China and India are no less remiss than those in the west for failing to understand the deep implications of Ricardo’s Law and the theory of real estate valuation for taxation and land management policy.
Financial collapse will only be understood in terms of this failure.
Actually tthat should read what is the capital of Victoria.
I also believe that during the Great Depression in New York, the 0.1% built skyscrapers with their immense wealth as a monument to their ego’s. High unemployment , debt deflation and favorable tax breaks made this possible courtesy the Great Depression.
Thanks for that Bryan.
Closer to home I was working as a surveyor with City of Melboune up to early 1990. Watched skyscrapers in Melbourne being built galore in the late 80’s. When the rot started to set in the Japanese sold off Diamarru and the sky scraper king, Floyd Pogdor suicided due to bad debts. His company, Pogdor Constructions went bankrupt . The joke at the time was what is the capital of Melbourne. Answer: 1 cent.
To cut to the chase, construction companies are beginning
to go bust similar to the late 80’s and if history repeats itself, China will collapse overnight like Japan did in the early 90’s.
The Chrysler building commenced in 1928 after the property bubble had burst in the US but before Wall Street had collapsed.
The stock market had crashed when site works for the Empire State Building began. That was a brave decision!
Weren’t the tallest buildings of their time such as the Empire State Building and the Crysler Building in New York built during the Great Depression.