Battersea - NAMA

The art-deco icon, which won global recognition through appearances in movies such as Stanley Kubrick's "Full Metal Jacket" and on the cover of Pink Floyd's 1977 album "Animals", has been derelict for over a quarter of a century.
It has already passed through numerous developers' hands since stopping power production in 1983 as Britain shifted to oil, gas and nuclear.
Developers now are courting investors for a 5.5 billion pound ($8.9 billion) redevelopment just as banks remain focused on unscrambling exposure to commercial real estate. The market has shown signs of recovery recently but is still treacherous.
"The building is likely to suffer major structural damage in five years if full repairs don't start before then," said Jeremy Castle, chief planning director at Treasury Holdings UK, the power station's current developers, referring to damage sustained after the roof was removed 20 years ago.
"We need to move fast to redevelop the site because the building is deteriorating quickly," he said.
The two-year downturn in Britain sliced almost 45 percent off average commercial property values. The Power Station's owners, who bought it for 400 million pounds in 2006, say its value fell by 15 percent in the six months to end-June 2009, causing the company to breach terms on some of its loans.
Battersea's imposing white brick chimneys have been a popular feature of London's skyline for almost 80 years, but its brickwork is held together by metal straps. Many bankers and financiers say plans to redevelop it are a commercial anachronism in a city obsessed with skyscrapers.
Castle's employer Treasury Holdings is an Irish property firm that controls the Battersea site through a 67 percent share in debt-laden Real Estate Opportunities (REO.I) (REO.L).
REO says the debt taken out to buy the station is still performing, but part of it, along with the majority of its loan book, will be transferred to Ireland's bad bank, or the National Asset Management Agency (NAMA) next year.
The Irish government is paying 54 billion euros ($78 billion) to buy risky commercial property loans with a combined book value of 77 billion from banks to clean up the legacy of excessive lending.

Reuters

William.K.Black

China's Property Bubble

“Once the bubble pops, our economic growth will stop,” warns Yi Xianrong, a researcher at the Chinese Academy of Social Sciences’ Finance Research Center. On Dec. 27, China Premier Wen Jiabao told news agency Xinhua that “property prices have risen too quickly.” He pledged a crackdown on speculators.
Although parallels with other bubble markets, the China bubble is not quite so easy to understand. In some places, demand for upper middle class housing is so hot it can’t be satisfied. In others, speculators keep driving up prices for land, luxury apartments, and villas even though local rents are actually dropping because tenants are scarce. What’s clear is that the bubble is inflating at the rich end, while little low- cost housing gets built for middle and low-income Chinese.
In Beijing’s Chaoyang district, which represents a third of all residential property deals in the capital, homes now sell for an average of almost $300 per square foot. That means a typical 1,000-square-foot apartment costs about 80 times the average annual income of the city’s residents.

Bloomberg

Dealing with thieves

America has the wrong approach for dealing with thieves. Rather than "looking backwards" at their misdeeds and "punishing" them, we merely need to ask that they not misbehave in the future, then monitor their behavior.
Believe it or not, this is how congressional leaders are addressing the thievery of three little-known gangs. Congress' compassionate approach is not meant for common robbers. No, no — lawmakers are happy to punish them to the hilt. Rather, the kid-glove treatment is reserved for thieves named Moody's, Standard & Poor's and Fitch's — the Big Three credit-rating agencies that exist to evaluate the worthiness of corporate-issued bonds, assigning a grade (from triple-A to "junk") that helps investors know the risk involved in buying the bonds.
But the Big Three run a rigged game that robs our pension funds and other investors. Moody's, S&P and Fitch are not independent public regulators, but for-profit firms that are paid fat fees by the very corporations whose bonds they rate.
Yes, this is an inherent conflict of interest! It allows rating firms to profit by merrily putting smiley-faced grades on lousy bonds, thus deceiving (and robbing) the public. For example, the Big Three gave thumbs-up to the subprime housing bonds that turned out to be worthless, leading to trillions of dollars in losses for the public and crashing our economy.
Yet, our soft-on-corporate-crime congress critters have declared these finaglers "too big to jail." Rather than taking the Big Three off the street, Congress is coddling them, meekly freeing them to continue their corrupt, for-hire, monopolistic system of credit-rating flim-flammery.

Thieving Bastards

The Glass Bottle

The Commercial Court has ruled that developer Bernard McNamara must pay almost €63 million to a group of investors, who along with the Clare businessman, part funded the purchase of the Irish Glass Bottle Factory site at Ringsend in Dublin.
The court also granted the investors summary judgement of €98m against Donatex Limited, a company owned by Mr McNamara, in relation to the same deal.
However, a stay has been put on the decisions until January so that an affidavit can be prepared in relation to what was described as Mr McNamara's deteriorating financial circumstances.
The claim arose in relation to a 2007 guarantee given by Mr McNamara over a loan advanced by the investors, through their Jersey registered company, Ringsend Property Ltd, to help the financing of the purchase of the site.
It was bought that year for a record €412m. The site is now estimated to be worth in the region of €60m.
In an affidavit, Mr McNamara alleged that the investors behind Ringsend Property Ltd include well-known businessmen Lochlann Quinn, Martin Naughton, Kieran McLaughlin and Barry O'Callaghan.
The investment opportunity was described at the time as a transaction offering 'the opportunity of participating with one of the most prolific and successful developers in the country in the development of the largest and most high profile property to become available in Dublin 4 for decades.'
Ringsend Property Ltd is seeking the repayment of its loan, because it claims a key clause of the loan agreement had been breached.

RTE

Shadow Land

Shadowland examines the future for Ireland’s built environment in the shadow of NAMA.
The Shadowland exhibition takes place in the City Wall Space in the new Wood Quay Venue, Dublin City Council Civic Offices, from Monday 14 to Friday 18 December 2009.
A response to the current economic crisis, Shadowland highlights the lack of ideas and imagination in planning and construction over the last twenty years, which has left a legacy of half-finished projects, ghost housing estates and land zoned for development in inappropriate locations.

Shadow Land

Into The Bog

In a week when Greece and Spain both saw their credit ratings under attack (see article), the budget at least gave the government an opportunity to reassure international investors that Ireland, unlike some other EU countries, is serious about controlling its budget deficit and public-debt burden. Mr Lenihan has done this with the toughest budget in his country’s history. Public servants face pay cuts of 5-8% on salaries up to €125,000 ($190,000); higher earners (who will include the prime minister) will see their pay cut by 15% or more. Unemployment and welfare benefits have also been cut, though not pensions. Next year’s budget deficit, at around 11.6% of GDP, will be similar to this year’s.
The budget came against the background of a sharp contraction in economic activity, far greater than that experienced in other euro-area countries. GDP is projected to decline by 7.5% in 2009 and a further 1.3% in 2010. An unemployment rate of 12% this year is at least showing some signs of stabilising. But consumer confidence remains weak and households continue to save more and to spend less, thereby depressing tax revenues. Next year, almost half of all income earners will pay no tax. In an effort to widen the tax base, the government proposes to introduce a new property tax.
The budget will put the government into direct conflict with trade unions for the second time this year. The pension levy may have been accepted by the general public, but the unions still protested vociferously. In pre-budget talks, the government noted a hostile public reaction to the unions’ proposal for a temporary pay cut for public-sector workers and a promise of big public-sector reform. It chose a permanent pay cut instead.
These measures mark the end of two decades of social partnership, based on a consensus approach to pay bargaining between government, employers and unions. Whether this will usher in a long period of industrial conflict will become clearer in the coming weeks. Public-sector unions are already giving warning of a sustained campaign of strikes. But in these hard times they may not win much support from the Irish public.

The Economist