Friday, Nov 30, 2007
The stagflation nightmare looms
MoneyWeek: Why rising skylines can lead to falling markets
Research suggests that the tallest buildings in the world tend to pop up just before an economic slump. And today, rising skylines across the world could be warning that we’re heading for the same fate…
Posted by mary @ 10:05 AM (374 views) Add Comment
3 Comments
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1. maddison said...
I love this story. It is very true that high buildings are often a prelude to bad times. It is the old lag effect of commercial property again. They didn't mention Canary Wharf either which was classic case of this. It takes years for a tall building to come to fruition and they often get completed at the bottom of the cycle.
Having said that the credit crunch will claim a few casualities before they even get off the drawing board.
2. drewster said...
There's a crazy construction boom in Dubai at the moment. Depending on whose figures you believe, between 15% and 33% of all the world's cranes are in Dubai. They are building shiny new skyscrapers, both offices and residential. Does this mean Dubai is about to stumble in a most spectacular fashion? I've always felt that the Dubai boom was dubious with so many shiny new flats being sold off-plan at dodgy property shows.
The one thing most likely to trigger a downturn in Dubai (apart from a credit crunch) would be a fall in the oil price, maybe back to $40-50 a barrel. I know it's almost heresy to say that on here, maybe it's a contrarian view. I do think the current high oil price ($90-95) is partly due to speculative investments rather than strong fundamentals, and the speculating hedge funds might need to sell their oil futures to cover margin calls on other falling assets (shares or mortgage-backed securities). This could push the oil price back down again, hurting the likes of Dubai.
3. maddison said...
Dubai is completely mad. My brother in law works out there. Amongst other things planned there is going to be a "sports world" with ATP standard tennis facilties, Massive stadiums, New horse racing track and racing car circuit. The idea will eclipse any olympic village to date