Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Tall buildings lead to market falls? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Sep 14, 2010

    Tall buildings lead to market falls?

    "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'.



    Equitymaster requests your view! Post a comment on "Tall buildings lead to market falls?". Click here!

    5 Responses to "Tall buildings lead to market falls?"


    Sep 14, 2010

    You can also add Burj tower and Dubai economic collapse!


    Mandar Apte

    Sep 14, 2010

    Burj Khalifa of Dubai can also be added to the list as latest example.



    Sep 14, 2010

    We all do well to remember this famous quote: "The best lession from history is that we never learn from history..believing that "this time its different".


    Franklin Antony

    Sep 14, 2010

    What about Burj Kalifa(Dubai)? It sure was publicized in the midst of a correction. Even confirming the reasoning!!!


    sowri rajan

    Sep 14, 2010

    I think the writer has missed out 'Burj Dubai' (later named Burj Khalifa), when the real estate fell and Dubai had to backtrack all construction activities. It has also led to financial collapse.

    Equitymaster requests your view! Post a comment on "Tall buildings lead to market falls?". Click here!

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Why Hasn't Warren Buffett Rung the Bell Yet? (The 5 Minute Wrapup)

    Aug 22, 2017

    It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.

    Think Twice Before You Keep Money In A Savings Bank Account (Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    A Darkness Is Spreading Across the US (Vivek Kaul's Diary)

    Aug 22, 2017

    Today, we are attacked by one preposterous thing after another, each of them even more absurd than the last.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 22, 2017 (Close)