Tall Buildings Lead to Market Falls...Next, Mile High Skyscraper...

Tall buildings lead to market falls?
by www.equitymaster.com

"The bigger the better" is inbuilt in human psychology. This phrase holds maximum truth in real estate. Developers and industrialists are perpetually trying to outdo each other by building the "tallest buildings". This is not a recent trend. It has been around since 1916, when the Woolworth Building was completed in New York.

But the spooky fact is that when a highly publicized 'tall' building space gets launched, it is usually in the middle of a stock market crash. Don't believe us? Let's see some examples of this.

Period: 1930s

'Tall' Buildings: Sears Towers in Chicago, Empire State Building in New York

Source: Yahoo Finance

The Sears Tower as well as the Empire State Building were launched in 1930 and 1931 respectively. It was right when the Great Depression was setting in. From the peak in 1930, the Dow Jones Index crashed by nearly 86%.

Period: 1989

'Tall' Building: Canary Wharf Tower in UK

Source: Yahoo Finance

The Canary Wharf Tower was launched in UK in the beginning of 1990. Just in time for the 1990s recession in which the FTSE 100 fell by nearly 19%.

Period: 1997

'Tall' Buildings: International Finance Centre (IFC) in HK and Petronas Towers in Malaysia

Source: Yahoo Finance

The IFC was launched in Hong Kong in the middle of 1997. Just in the middle of the Asian Financial Crisis in which the Hang Seng Index (HSI) fell by 60%.

Source: Yahoo Finance

The Petronas Towers were launched in Malaysia in the middle of 1997. Just in the middle of the Asian Financial Crisis in which the Kuala Lumpur Composite Index (KLCI) fell by 77%.

Period: 2010

'Tall' Building: Burj Khalifa in Dubai

Source: Khaleeja Times

The world's tallest building Burj Khalifa was launched on 5th January, 2010. Dubai financial markets were already reeling with the headwinds surrounding its property developers. The Dubai financial markets (DFM) declined by 34%.

Spooky isnt it?

So why does it happen? Interestingly, it is the increased liquidity in the system that fuels such fantasies, which industrialists seek to convert to realities. The economy is going great guns. Investors are in a euphoric mood. Money is easily available through loans and private equity funds. All this euphoria clouds the thinking of the developers, who then start aiming for the heights.

But, as these fantasy projects start taking shape, the economic mood is generally turning towards the worse. By the time these projects are completed, the economy starts slipping into recession and these monuments start serving as a gloomy reminder through their empty floor spaces and vacant expressions.

History has proved this fact time and time again. But interestingly, history is always ignored as developers get back into these fantasy moods claiming "this time it's different".

Recently an Indian developer, Lodha Builders, has decided to build the world's tallest residential building. We are sort of hoping that the jinx breaks in India and history does not repeat itself. Hopefully, 'this time it is different'.

Saudi Arabia Plans For Mile-High Skyscraper

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A mile? That's not even scraping the sky anymore -- that's an open-palm grope!
Because building a tower taller your neighbor's is making a comeback in proving your superiority (God, whatever happened to a good ol' fashioned pissing contest?!), Saudi Arabia plans on building a $30-billion(!!!!!!) skyscraper that's almost twice as tall as Dubai's current record-holder, the Burj Khalifa (828 m; 2,717ft) with a tower a full mile high (1,600 m; 5,280 ft). *shivers* YOU'RE GOING AGAINST NATURE.

Prince Al Waleed Bin Talal, head of Kingdom Holding Company recently gave his approval for construction of what will be billed as the world's tallest man-made structure -- the Kingdom Tower.
Designed by Adrian Smith, the Kingdom Tower will be built in Saudi Arabia's city of Jeddah. The tower will stretch one mile up into heavens and include 12 million cubic feet of space, several stories of office space, several stories for a hotel and four tiers of residential space, with the upper most tier reserved for "alternative energy generation" solutions (perhaps including a pendulum to keep the entire tower from collapsing).

An elevator ride to the top is expected to take about 12-minutes, which is 11-and-half minutes longer than I could ever hold a fart trying to be a decent human being. Geez -- could you imagine getting to the bottom and realizing you left something upstairs? You'd have to just leave it OR IT'S ANOTHER 24-MINUTES BEFORE YOU'RE BACK DOWNSTAIRS. That's a f***ing commute and you haven't even left the building!
Hit the jump for a shot of the building's layout, as well as a video about it.


Kingdom Tower will make the Burj Khalifa look short, reach one mile up [dvice]
Thanks to Thomas, who likened the building to the Tower of Babel. Really?