Don’t forget this unforgettable crisis

Patrick Vaughan, the serial entrepreneur whose London & Stamford vehicle snapped up £42m-worth of flats at Arsenal’s old stomping ground of Highbury this week isn’t one to talk up the market artificially. Indeed he’s not usually one for public pronouncements of any kind. Yet this week Vaughan said publicly what many in property have been afraid to utter in anything other than hushed tones behind closed doors: “The falling knife has stopped falling.” Speaking at the EG Awards, where he and Raymond Mould stepped out of the shadows to collect the Outstanding Contribution to Property gong, he effectively called time on the downturn. “We have in this room all survived the property crash of this century,” he said. “We are all a bit poorer, we are probably a bit wiser but the world did not come to an end.” If Vaughan is right that the worst is conclusively over – and many believe he is – that, taken with last week’s insistence by Lloyds and RBS that there would be no bankers’ fire sale of distressed assets, offers the first opportunity for some time to focus on the issue that really matters. Industry needs to learn lessons… Because, while planning and rebuilding are important, the need to learn lessons while we can still remember them is absolutely paramount. The problem, as Nick Leslau told an industry gathering a fortnight ago, is that lesson-learning is not a given. “Will we do the same things again?” he asked rhetorically. “Absolutely. We all will.” On the one hand, Leslau was being typically candid. On the other, his words were worrying. To borrow a phrase, a failure to learn from the past year-and-a-half would be a colossal waste of a good crisis. Sadly, there are signs that it’s happening. Take politicians, for instance. As party conference season gives way to the general election campaign, the battle for headlines is intensifying. Being seen to be tough on recession and the causes of recession is one thing; choking off a recovery that has barely begun is another. (In that regard, this week’s business rates review announcement could hardly have come at a worse time, p35.) …to avoid return to short-termism Investors are no different. Commercial property is looking pretty attractive as an asset class. By asset value, some funds are over 40% off their peak and, with the first encouraging quarterly valuations in some time being reported, there are gains to be made. Without caution, short-termism will return. Then there are bankers. Financial institutions’ wealth, expertise and reputations are built on their core business of lending depositors’ money at a margin, not by traders putting their shirts on black in the international money-market casino. To be more prosaic, will lenders never again lend on commercial property at 102% LTV ratios? Few banks may be lending much now, but irrational exuberance will return surprisingly quickly. But enough doom and gloom; there are beacons of light. Grosvenor (p37) is a good example right now. To bring in income and make use of its under-employed development team, it is striking innovative deals with banks to work as development manager on their growing portfolios of bankrupt development projects. All parties will benefit from the arrangement. Others, including agents, should ask themselves what they can do that’s different. With focus, determination and perhaps some luck, lesson-learning is an acquirable skill. It has to be.