Meanwhile: Edifice complex rises in New Delhi
International Herald Tribune
April 15, 2005
Salil Tripathi 

Plans to build a record-breaking skyscraper in a New Delhi suburb were given the go-ahead recently. Local officials said the building in Noida would be 2,329 feet tall, or 710 meters, - 663 feet higher than Taipei 101, currently the tallest building on the planet. The skyscraper, said to have been designed to resemble the peaks of the Himalayas, is scheduled to open for business by 2013.
 
"We want this building to show the world what India can do," Hafeez Contractor, the well-known Indian architect, told the Guardian.
 
There they go again, architects and developers, this time in India, driven by hubris, seeking to reach the skies. If only they'd ponder the remarkable correlation between rising skylines and falling markets. For a century, almost all attempts to build a record-breaking skyscraper have presaged an economic downturn.
 
Andrew Lawrence, a former economist at the investment bank Dresdner Kleinwort Benson, wrote about this trend in 1999. He identified the uncanny correlation between the construction of tall buildings and an economic collapse.
 
The evidence was persuasive: New York completed the Singer Building in 1908 and the Metropolitan Life Building in 1909, when the panic of 1907 was already under way. Later, the race between 40 Wall Tower (1929), the Chrysler Building (1930) and the Empire State Building (1931) coincided with the Great Depression. Elmer Davis wrote in 1932 that the cloud-piercing towers leaping skyward were inspiring for everybody except those unfortunate enough to own them.
 
It happened again in the early 1970s. As the World Trade Center emerged on the southern tip of Manhattan and the Sears Tower rose in Chicago, the oil shock brought about global economic downturn. Later, the Petronas Towers in Kuala Lumpur symbolized the Asian economic crisis.
 
Noting these correlations, Lawrence wrote: "Grandiose building projects often coincide with excessive optimism and overinvestment." Or, the real-estate equivalent of what Alan Greenspan, the chairman of the U.S. Federal Reserve, had called "irrational exuberance." Is it India's turn now?
 
Of course, skyscrapers matter, and in land-scarce commercial beehives, like New York, Singapore, Hong Kong or Mumbai, they are necessary. They can be energy-efficient, and many skyscrapers are pleasing to the eye, giving cities a characteristic signature.
 
But elsewhere, they might stick out like sore thumbs, becoming "shareholder-paid CEO observatories," as William Mitchell, dean of the School of Architecture and Planning at the Massachusetts Institute of Technology described them in Scientific American in 1997. The Petronas Towers were described as another example of former Prime Minister Mahathir bin Mohamad's "edifice complex."
 
Some caveats are in order: Most public offerings warn investors that past performance does not guarantee future returns. Despite that, the relationship between the planned height of a skyscraper and the stage of a business cycle is not as random as a butterfly flapping its wings in Brazil and setting off a tornado in Texas.
 
Economists explain business cycles by pointing out that booms are unsustainable if too much money is available too cheaply. When money is easy to obtain, governments and developers dream up monumental structures.
 
They also believe their economy is unique and won't repeat mistakes of others. This leads to overinvestment and speculation, both of which sustain the illusion of impending boom. When graphs point upward, and all indicators rise, chief executives believe that even the sky may not be the limit.
 
Fewer mistakes will be made if regulators recognize a skyscraper's symbolic value and its relationship with the availability of easy money that could distort investment decisions.
 
This doesn't mean buildings have to be short. But it means regulators and economists should look out of their windows and count the number of cranes dotting the skyline more often.
 
Skyscrapers are expensive: Let them be admired for their aesthetic appeal, not remembered as symbols of excess.

Copyright © 2006 the International Herald Tribune