Labour does such a nice line in hypocrisy.
Massimo A. Allamandola
suburbanstudio at runbox.com
Tue Aug 21 09:31:41 BST 2007
BAD TIME WILL END
In 1999 the UK government set out its principle of Sustainability :
- social progress which recognises the needs of everyone;
- effective protection of the environment;
- the prudent use of natural resources;
- the maintenance of high and stable levels of economic growth and
These aims should be pursued in an integrated way through a sustainable,
productive economy that delivers high levels of employment, and a just
promotes social inclusion, sustainable communities and personal well
being, in ways that
protect and enhance the physical environment and optimise resource and
The above is an extract from the PPS1 ( Delivering Sustainable
It is interesting to underline the bit that stress :
<<a just society that promotes social inclusion>>
From Policies to Reality :
"This is where Tony Blair bought," says Fatemi, the top producer at
Foxtons Chief Executive Officer, Michael Brown is the former chief
operating officer of bankrupt energy trading company Enron Corp.'s
By Simon Clark
Bloomberg Markets September 2007
Spiraling home prices have made the British capital the world's most
Real estate brokers are getting rich as the surge fuels worries of a bubble.
By Simon Clark
Bloomberg Markets September 2007
One late-June morning in London, a real estate broker named Becky Fatemi
eases into her black Porsche Cayenne and heads for Connaught Square,
just north of Hyde Park.
As her sport utility vehicle turns into the square, Fatemi--who, by her
own account, handled about 55 million pounds ($113 million) of home
sales in 2006-- nods toward one of the Georgian town houses.
"This is where Tony Blair bought," says Fatemi, the top producer at
Foxtons Ltd., the biggest residential property brokerage in London.
Through Foxtons and another broker, Blair purchased the five-story
stucco house for £3.65 million in 2004, when, as prime minister, he was
still living on Downing Street. Fatemi, 31, says Blair's place is worth
as much as £4.7 million now--a 29 percent increase.
Blair is no real estate savant. A confluence of powerful forces from low
mortgage rates to Russian petroriches to the teeming wealth of the City
of London, Europe's largest and most dynamic center of finance, has
supercharged home prices across the British capital.
The average price of prime London homes, the ones brokers consider the
most desirable, has soared 254 percent since 1997, when Blair's Labour
Party came to power, according to London-based real estate broker Knight
Frank LLP. Defying predictions that the market would sputter, that
average rose 28.7 percent in 2006, the steepest increase since 1979, and
then jumped 18 percent during the first half of this year.
These days, buyers who dillydally risk getting gazumped. That's British
slang for what happens when someone arrives on the scene at the last
minute and offers a higher price.
The decade-long leap in prices has made London the most expensive city
in the world for high-end homes--costlier per square foot (0.09 square
meter) than Monaco, New York, Hong Kong or Tokyo, according to Knight
Frank, which says prime London houses cost about £5 million and prime
flats run about £2.5 million. The most-sought-after property in areas
such as Kensington and Chelsea, the priciest of London's 32 boroughs,
sells for an average of £2,300 a square foot, according to Knight Frank.
Comparable living space in Monaco, the world's second-most-expensive
locale, costs £2,190 a square foot. Similar digs in No. 3 New York fetch
£1,600 a square foot, according to Knight Frank.
The unprecedented surge has brought with it unprecedented risks. Blair's
successor, Prime Minister Gordon Brown, must now contend with a host of
dangers- -from accelerating inflation to rising interest rates, to
mounting mortgage debt--that could puncture the housing market and
threaten the nation's longest period of economic growth in more than 200
years. The housing market hasn't been this heady since the 1980s, when
prices almost tripled. That boom, touched off by falling interest rates
and rising stock prices, ended when a subsequent increase in inflation
drove interest rates as high as 15 percent. London home prices sank 27
percent from December 1988 to December '92.
Now, the thunderheads are gathering once again. As the U.S. Federal
Reserve battles a subprime mortgage crisis, the Bank of England is
tightening credit to combat inflation. As of July 11, the U.K. central
bank had raised its benchmark lending rate five times since August 2006,
pushing the benchmark lending rate to a six-year high of 5.75 percent.
Tightening credit will squeeze people who've gone deeper than ever into
debt in order to buy homes. Since May 1997, the amount of U.K. mortgage
debt outstanding has ballooned, soaring 168 percent to a record £1.12
trillion as of May 30, according to the Bank of England. British
homeowners have never been so stretched. A decade ago, first-time buyers
typically took out mortgages equal to 2.4 times their annual salaries.
Today, that figure has climbed to 3.2 times. About £120 billion of
short-term fixed-rate mortgages may have to be refinanced this year at
new, higher rates.
London, long attuned to old money and social class, is increasingly a
city divided by new wealth. The capital is being split between the rich,
who can afford homes, and a growing number of ordinary folks who can't.
Laying out his agenda on July 11, Brown told Parliament that many people
in Britain have been priced out of the home market. He vowed to build
more low-cost housing. "Putting affordable housing within reach, not of
the few, but of the many, is vital," Brown told Parliament.
No broker has fed the frenzy like London-based Foxtons, which has helped
drive up prices and, in the process, its own commissions, by inflating
home valuations, wooing buyers and sellers--and pushing agents to close,
This year, Foxtons itself, along with another British property broker,
Countrywide Plc, was gobbled up. The buyer in both cases was the new
power in global finance: private equity. London-based buyout firm BC
Partners Ltd. bought Foxtons from its founder, Jonathan Hunt, in May for
about £390 million. New York-based Apollo Management LP bought
Countrywide in May for £1.07 billion.
Hunt's exit is a bad sign, says Peter Nicholls, who sold his own London
real estate firm, Royston Estate Agents Ltd., to rival Douglas & Gordon
Ltd. in May for an undisclosed price. "When Jon Hunt sells, you know the
market's going to be in trouble," Nicholls, 44, says. Hunt declined to
be interviewed for this story, as did Foxtons Chief Executive Officer
Michael Brown, former chief operating officer of bankrupt energy trading
company Enron Corp.'s European unit.
"I am happy to hand over the reins, knowing that what we have started
has a very long way still to go," Hunt said in a May 21 statement.
London's real estate mania has been good to Hunt: In 2005, he spent £14
million to buy a mansion in Kensington, opposite the home of steel
billionaire Lakshmi Mittal.
Hunt, 54, electrified the real estate scene by creating a snazzy company
with a gladiatorial sales culture. From the moment Hunt founded Foxtons,
in 1981, he never tolerated excuses from his brokers, former Managing
Director Peter Rollings says. In the early days, Foxtons' attitude
toward its brokers was simple: "There's your desk, there's a phone,
there's your car--now bugger off and sell some property," says Rollings,
who left Foxtons in 2005 and now runs rival broker Marsh & Parsons Ltd.
Today, the firm Hunt founded in a former pasta restaurant in Notting
Hill employs 1,300 people, most of them fresh out of university and
willing to work weekends. Foxtons' 780 brokers race through London in a
fleet of 635 Mini Coopers. The cars are painted British racing green and
emblazoned with names like "Park Lane Prince" and "Fulham Flyer." Top
producers are rewarded with BMWs.
Inside Foxtons' glass-and-steel headquarters in Chiswick Park, in west
London, hundreds of telebrokers with headsets work the phones as dance
music thumps. The young crowd cheers, claps and exchanges high-fives as
brokers reel in new clients. Foxtons employees staff the phones 8 a.m.-8
p.m., seven days a week, and typically process 1,000 applications a day
from people looking to buy or rent.
Suddenly, one broker leaps to his feet. "I got a val!" he shouts, to
huzzahs from his colleagues. Val is Foxtons-speak for a request to value
Photos of employees, ranked by valuations, are projected onto one of the
walls. On Friday nights, the team gathers for a meeting during which
brokers shout out their weekly sales numbers. Newbies who cut their
first deals are rewarded with bottles of champagne.
From his perch in Chiswick Park, manager Jean Jameson, a 37-year-old
from South Africa in a gray suit and pink tie, plays a Foxtons version
of Big Brother. He can peer into Foxtons offices across London via video
camera to check up on brokers and see who's available for assignments.
Foxtons lets its brokers choose how they get to be paid. Some collect
£22,000 annual salaries and no commissions. Others opt for £10,000
salaries and 10 percent of the fees they generate. Still others choose
to take 20 percent of their commissions and no salary at all. Fatemi
brought in £1.5 million in fees for Foxtons in 2006 and says she pulled
down six figures.
"You can write your own check if you work hard enough at it," Jameson says.
long the way, Foxtons agents have bent--and sometimes broken--the rules.
In 2000, the London borough of Camden fined Foxtons for staking signs
outside homes of people who hadn't hired the firm, a practice known as
fly-boarding. The same year, Foxtons issued an apology after one of its
signs ended up in the front yard of Alastair Campbell, Blair's press
secretary. Jameson says Foxtons stopped fly-boarding years ago.
Foxtons has always played tough, Rollings, 45, says. It has gone to
court to collect a commission from a seller when a buyer backed out of a
purchase after making a down payment. "They're just incredibly hard,
unforgiving," Rollings says.
Fatemi says competitors are worse. Unscrupulous rivals goad buyers into
raising their offers by lying about how many people are bidding on a
home, she says.
"That's sales, isn't it? It's putting the pressure on," says Fatemi, who
left her native Iran in 1979, at the age of 3, after the Islamic
Her advice: Buy now, before prices rise even more. People who are
unwilling to pay top dollar can end up getting gazumped. Gazump is a
Cockney corruption of gezumph, a Yiddish word that means to swindle or
overcharge. Gazundering is gazumping in reverse: It happens when a buyer
threatens to pull out of a deal unless the seller cuts the price.
These days, London is a gazumper's market. Old landmarks vie with new
monuments to Londoners' love affair with bricks and mortar.
Not far from Kensington Palace, brothers Christian and Nicholas Candy
have dreamed up the most expensive address in town: One Hyde Park.
Apartments in the glass-and-steel complex, scheduled for completion in
2010, have sold for a city- record £5,000 per square foot, according to
Edward Lewis of London-based Savills Plc, one of the brokers contracted
to sell the 80 homes in the development.
Nearby, Knight Frank partner Rupert des Forges steps through an
apartment in what was once a warehouse for Harrods department store. The
two-bedroom flat, adorned with silk-and-wool carpets, a white Yamaha
grand piano and a bespoke bar, was for sale for £6 million in late June.
A parking spot in the garage, next to three Aston Martins, two Ferraris
and a pair of Rolls-Royces, costs an extra £250,000.
"You can name your price right now," des Forges, 38, says. He's still
bleary- eyed from a trip to Moscow where, he says, he pitched six
Russian billionaires on the London market.
To the east, a thicket of 30 construction cranes rises around the dome
of St. Paul's Cathedral, Christopher Wren's 17th-century masterpiece. At
nearby Millennium Bridge, on the River Thames, developer Amir Zarbafi is
converting a building that once housed a tea company into luxury flats.
Zarbafi, 43, bought the building in 1997 for £3 million. It's worth £50
million now, he says.
Zarbafi says he's stunned by the prices that people are paying for
homes. "But I haven't seen anything that suggests the momentum is
stopping," he says.
People have been warning of doom for years. So far, the market has
confounded home buyers and research analysts alike.
Former JPMorgan Chase & Co. banker Mario Vaccarino says he bought a
three- bedroom flat overlooking Porchester Square Gardens, in west
London, for £275,000 in 1998 and sold it for £420,000 in 2002, when he
moved back to his native Italy, figuring prices had topped out. "I
thought prices were going to fall," Vaccarino, 33, says. Wrong. His old
flat is now worth about £770,000, Marsh & Parsons broker Keith Gorny says.
Analysts at Lehman Brothers Holdings Inc. predicted in 2005 that the
market would sputter. In a May 25 report, Lehman analysts Alan Castle
and Peter Newland said it was hard to explain why prices have kept
rising instead. By their reckoning, U.K. home prices may exceed fair
market value by as much as 15 percent.
Estate agents and property developers say zooming prices reflect basic
economics: Demand outstrips supply. Planning laws protecting everything
from London's medieval street plans to views of the Palace of
Westminster and St. Paul's make it difficult to build high-rise housing,
Zarbafi says. At the same time, City bankers and rich foreigners,
particularly from the former Soviet Union, all want to live here--and
have the means to bid up prices, he says.
Ordinary Londoners can't compete with the money pouring into the market.
Roman Townsend says he's lucky to have found a 400-square-foot studio in
a building owned by the municipal government in Battersea, south of the
Thames, for £110,000. For that price, Townsend, a 2002 graduate of
Cambridge University who works in public relations, gets graffiti in the
elevator and a view of Big Ben. "I looked around and found what I could
afford," Townsend, 28, says. "I'm happy." He says he put no money down
and financed the entire purchase with debt.
As prices have spiraled higher, a new breed of London real estate
speculator has emerged. Londoners who can afford to buy several homes
are snatching them up and then renting them out, a strategy known as
buy-to-let. Nationwide, the value of outstanding mortgages for this sort
of purchase rose 29 percent to £94.8 billion in 2006 from the previous
year, according to the Council of Mortgage Lenders.
The buy-to-let trend troubles Simon Nimmo, co-founder of Alexander Hall
Associates Ltd., Foxtons' mortgage brokering unit. "You think, 'Oh
crikey, if this all goes wrong, you know, there's a lot of people
exposed to property,'" Nimmo, 44, says. He sold his 30 percent stake in
Alexander Hall to Hunt in 2003.
Fatemi says she's not worried. On a rainy June Monday, she's picking up
keys to listed properties at the Foxtons office on Park Lane, opposite
Hyde Park. The place looks more like a cafe than a real estate office. A
beaming blonde receptionist offers cappuccino and sparkling water.
Plasma TV screens flash pictures of hot properties. Buyers leaf through
listings while sipping lattes. "We still get people coming in and
saying, 'Can I have a latte and a hot chocolate?'" Fatemi says. "Like,
no, you have to buy a property."
Fatemi has what it takes to court an international clientele. She
graduated from University College London in 1998 with a bachelor's
degree in Spanish and French. She joined Foxtons in 2000.
Fatemi is dressed to sell. She's wearing a black skirt and jacket by
Spanish retailer Zara and a bright turquoise top. Her black Chanel
handbag matches her high heels. Sparkling on her wrist is a
diamond-studded Chanel watch, a gift from Hunt in 2005.
Over the next few hours, Fatemi will crisscross London in her Cayenne to
inspect a one-bedroom duplex near Paddington station, listed at
£450,000; a two-bedroom apartment in Marylebone, the area where Madonna
lives, which can be leased for 48 years, rather than bought outright,
for £1.495 million; and an interior- designed apartment on Green Street,
in the hedge fund district of Mayfair, that's on the market for £4.65
"It's still crazy," Fatemi says of the housing market as she pulls out
of Connaught Square, her black hair swishing over diamond-stud earrings.
"It's been going up and up and up."
Fatemi has had quite a run herself. She says she once tried to cram a
Saudi Arabian princess--along with the royal's maid and security
guard--into a Foxtons Mini. (They couldn't fit.) Another time, a Russian
businessman asked her to find a £1 million flat for his 20-year-old
daughter and ended up spending £6 million.
Then there was the time an Englishman kept her searching for an
apartment for two years. Nothing would do. Finally, the man told her
why: He was looking for a flat with a back door. "He said, 'Becky, I
have a certain number of girlfriends, and if my wife's ever at home, I
need a back entrance,'" Fatemi says. She says she found him a flat with
a fire exit. The price: more than £2 million.
Feeding a parking meter on Green Street, Fatemi counts the ways anxious
buyers send her bids. Offers come in over the phone and via courier,
e-mail and text message. People have instant messaged £1.5 million
offers, she says.
Inside the Green Street apartment, Fatemi surveys the mock-croc tables
and blue- grey velvet sofa draped with a faux-fur throw. Martha Lane
Fox, co-founder of travel Web site Lastminute.com Plc, and members of
the Saudi royal family live opposite, she says.
People who can afford a home like this won't be put off by a 1 or 2
percentage point rise in rates, Fatemi says. "That's one or two less
dinners at Nobu, do you know what I mean?" she says.
All the same, Fatemi knows firsthand how frustrating it can be to find a
home in London these days. She bought a flat near Regent's Park last
December for £452,000. It's now worth £550,000, she says.
"It was the most horrific thing I've ever been through," Fatemi says of
the purchase. She says she had to fend off seven rival bidders.
Des Forges, the Knight Frank broker, has played the market too. He
bought a home for £490,000 in 2001 and sold it in June for £1.05
million. He's moved up to a larger, £1.4 million house in Hammersmith.
"We're in an unprecedented market," he says.
Des Forges, the son of a Herefordshire farmer, is an architecture
aficionado who favors Hackett suits with a traditional English flavor.
He attended Ampleforth College, a North Yorkshire boarding school run by
Benedictine monks, and went to work in real estate at the age of 19 as,
he puts it, a "tea boy." By his own account, he sold £135 million of
property from April 2006 to April '07.
On this late-June day, des Forges is padding across walnut floors in his
socks inside a redbrick town house in Sloane Gardens, off Sloane Square.
The Victorian interior has been gutted and given a sleek modern look
that includes a laser-cut steel staircase, exposed brickwork and a
seamless glass elevator shaft. The ground-floor maisonette--with a
sweeping, cantilevered walnut staircase, storage for 1,200 bottles of
wine and a 42-inch (1-meter) plasma TV hidden behind a walnut panel in
the master bedroom--is on the market for £3.95 million.
Des Forges says an Italian banker and his wife have bought one of the
places upstairs for £5.75 million. An Israeli couple has purchased
another for £4.7 million.
When des Forges looks at buyers such as these, he sees the future of
London and its housing market. London, a global nexus of finance, law
and media, is luring the best and brightest from around the world, he says.
"I think it's just the beginning," des Forges says of London's ascent.
"Where else is going to compete with it, really?"
Good times don't last forever. As the price--and risk--of buying London
real estate climbs, many people are asking when this boom will end.
One June afternoon at Frankie's, a bar and grill in Knightsbridge,
Savills broker Brian d'Arcy Clark is nursing a beer while a colleague
sips champagne. Up walks the restaurant's French manager,
"Les agents immobiliers!" Slowik exclaims. "It's crazy, your market,
huh? Is it going to collapse one day?"
"Tomorrow," d'Arcy Clark quips.
"Good!" Slowik says. He's hunting for an apartment.?
Simon Clark is a senior writer at Bloomberg News in London.
sclark4 at bloomberg.net
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