Skyscraper index: Maybe it’s time for Sandton to feel afraid
Research says huge buildings tend to pop up just as economies overheat
On a macro scale, the “skyscraper index” punted in 1999 by investment banker Andrew Lawrence says huge buildings tend to pop up just as economies overheat.
The Chrysler and Empire State buildings in New York were commissioned in the early days of the Great Depression and the theory applies even today, according to Lawrence’s research.
Looking through the same lens at Johannesburg’s financial hub of Sandton, then, it would not be entirely unreasonable to feel a tad afraid.
Behemoth office blocks, housing the likes of financial services firms Discovery and Old Mutual, law firm Webber Wentzel and energy company Sasol, are springing up all the time in what is certainly not an overheating South African economy, despite what the Sandton skyline might suggest.
Since the start of 2018, shortly after Discovery’s employees moved into the financial services firm’s R3-billion head office, the group’s shares have ominously slipped from R186 to R171.45.
However, shares in Sasol have gained since the firm’s employees moved into the group’s new headquarters in late 2016.
Hopefully, South Africa and its companies are the exception, rather than the rule, under Lawrence’s model.