C4 Dispatches - The British Property Boom

TickersPlaysPop

With so many supposedly trust worthy reports turning out to be dodgy I approach with caution...

Even such a simple thing as Crime reporting by the police .... need I say more?

antrobus

TickersPlaysPop wrote: »

With so many supposedly trust worthy reports turning out to be dodgy I approach with caution...

Even such a simple thing as Crime reporting by the police .... need I say more?

Do you have nothing else to contribute to this thread other than to pile logical fallacy upon logical fallacy?

Thrugelmir

TickersPlaysPop wrote: »

So you are assuming land in the hands of residential house development companies is dominated by borrowed money? Do you know this as a fact?

Vast majority of businesses operate on borrowed money at any given point in time. For the simple reason that they have to construct, manufacture, buy stock or provide a service before receiving any income. By income I'm not referring to profit either. Just cash. That's a fact.

princeofpounds

CLAPTON wrote: »

I'm not sure I understand what you are saying but by way of example, the Battersea Power Station site has been derelict for 30 years.
Do you think that lack of finance for investment was the restricting factor or something else?

I am not going to be able to give you a real answer because

A) the point I made was a general point and this is a specific example
And
I am no expert on the history of the battersea site.

However, my limited understanding is that there have been stories for years about battersea failing to launch because of so-called 'lack of investment'. But this is a symptom, not a cause.

The battersea site was non-economic not because of the actual housing; of course there is plenty of demand to live around battersea at prices that allow for land purchase and development costs. It is near-prime Central London and there have been at least two large development immediately adjacent to the site in the time it sat empty.

The difficulty came largely from the various planning obligations and restrictions attached to the site:

- the listing of the power station, which is a decrepit structure, has been a major barrier. I believe the last time consultants looked at the site they thought it would cost £400m in direct costs and lost revenue opportunity to keep it rather than demolish. That's about a third of the margin you would expect from the site gone right there, as an estimate.

- the contribution demanded for the underground extension. That costs about half a billion itself. You would get some back in value uplift and TFL would contribute a bit, so it's not quite as big, but still huge.

- affordable housing (a stupid phrase) and other section 106 contributions. I have no estimate for this, but it would also be huge.

- a strange refusal to split the site into manageable portions to be planned and financed sequentially.

The money is certainly there. The TOTAL build cost of the project is about one percent of the gross fixed capital formation of the uk for just one calendar quarter alone. A blip. But the project was basically throttled by what amounts to killer levels of indirect taxation.

I a

princeofpounds

Thrugelmir wrote: »

Vast majority of businesses operate on borrowed money at any given point in time. For the simple reason that they have to construct, manufacture, buy stock or provide a service before receiving any income. By income I'm not referring to profit either. Just cash. That's a fact.

Indeed. In fact a customer paying in advance is just another form of borrowing.

Development projects typically operate with 60-80% debt financing as standard. Though it depends on the project and stage of development.