It has been a summer bookended by notable anniversaries, ones whose consequences continue to shape today’s market.
Expect plenty of coverage in the coming weeks of the collapse of Northern Rock. It was a decade ago – August 2007 – that officials from the Financial Services Authority and the Treasury picked up the phone to then Bank of England governor Mervyn King.
They warned of the potential impact of the global credit squeeze on Northern Rock’s business. Within a month, queues were forming outside the bank’s branches as hundreds sought to withdraw their savings. The rest isn’t history; for most the fallout from the global financial crash continues to impact.
That anniversary follows July’s marking of 20 years since Hong Kong was returned to China. You will recall how Chinese officials pledged “one country, two systems”. Democracy campaigners say that is a commitment that has been reneged on. Now, with the Chinese government subjecting overseas real estate investments to additional checks and audits (p19), investors will be wondering whether two systems will prevail there too.
Dalian Wanda knows this better than most. Its exit this week from its £470m purchase of Nine Elms Square, SW8, from St Modwen is its latest response to months of pressure from officials over its debt and global footprint.
What will this mean for real estate in the coming months?
“We believe commercial real estate prices are factoring in unrealistic income growth as the influx of Chinese money tails off,” Jeffries analyst Mike Prew said last week. “The next foreign buyers in the queue will pay a lower entry premium as headline rents fall.”
That may soon be tested. GIC and British Land are considering a £1.1bn sale of 5 Broadgate, EC2, and Safra is mulling a £1bn sale of the Gherkin, EC3. Others will be considering their options as the climate shifts.
If Prew is right, British Land and Oxford Properties will be feeling even more pleased with their £1.15bn summer sale of the Cheesegrater to CC Land. Landsec and Canary Wharf Group, which secured £1.28bn from LKK Health Products Group for the Walkie Talkie, will also feel justifiably satisfied.
The key question is where the Chinese government might go next. Controlling outflows from mainland companies is one thing, applying similar controls to those with Hong Kong listings would be very different. That would hit the UK hard.
■ There were several notable aspects to Gary Neville’s unveiling of a new lozenge-shaped design for the St Michael’s Partnership’s controversial £200m tower in Manchester city centre.
Architect Hodder+Partners has redesigned the original scheme in the wake of local and heritage group opposition.
In an interview with EG this week, Neville’s contrition was refreshing. “We accept we got it wrong first time,” he said.
Reaction to the news online was even more revealing. “How many objectors are emotionally motivated as he’s a United man?” asked one tweeter. (As if planning weren’t emotive enough, throw in football partisanship and you have something truly divisive.)
But most interesting was this question: “If we must have high-rises, what should they look like?” asked Buzzfunk. “For those objecting to the appearance of the plans here, what does a Mancunian high-rise look like to you?”
It’s a good question and one which should be put to objectors more if we accept that our cities cannot be set in aspic. What does good look like?
To send feedback, e-mail damian.wild@egi.co.uk or tweet @DamianWild or @estatesgazette
