Last summer,
London’s Mayor warmly embraced foreign cash investment gushing into London
property. In March 2014, the Mayor finally acknowledges a “downside” to such vast capital inflow, writes Paul Coleman.
 |
London Mayor Boris Johnson waves papers signifying his 'concordat'
with property developers at MIPIM 2014 |
Give 'appease' a chance
Rewind to
June 2013.
Inside a big
white tent in Berkeley Square.
Delegates perch
on show stands at the London Real Estate Forum.
London Mayor
Boris Johnson strides to a podium.
Mayoral sermon
time, dashed with caper tales and jolly japes.
Johnson flatters
an international cluster of property investors, developers and agents.
He
praises them for firing up London’s property boom
Heralds them as
“galacticos, real superstars, doing more than any other to drive jobs, growth
and recovery in our great city”.
“I was in Abu
Dhabi recently and was thrilled to be told by the Sheikhs they recognise me as
the de facto ruler of the eighth Emirate,” jokes Johnson.
He welcomes
Malaysian investors pouring £1.6 billion into a massive new luxury homes
development around Battersea Power Station – “that moldering old hulk most of us only
remember from a Pink Floyd album cover”.
Let free market
global property investment cash gush into London.
Bring it on, chimes Johnson.
MIPIM Cannes
2014
Fast forward to
March 2014.
Inside a MIPIM
conference hall at Cannes on the French Riviera.
Delegates digest
a handsome lunch.
Mayor Johnson
shuffles to a podium.
Since LREF 2013,
foreign investment inflows in London land and property aggressively intensify
the number of Londoners on average and low incomes who simply cannot afford to
buy a home in London.
Property prices
spike.
Council estates
undergo demolition.
Replaced with
luxury high-priced housing developments carrying a low quotient of so-called
‘affordable’, part-buy, part-rent homes.
Developers
market new homes in marketing suites in Hong Kong, Singapore and Shanghai to
cash-rich buyers.
Londoners who
can scrape together a deposit – and secure a mortgage from a reluctant market
of lenders - often don’t even know these new homes are on offer.
Many more
Londoners are simply squeezed out of London – ‘displaced’ from their own city
where their families have lived for generations.
On Johnson’s
Mayoral watch, Londoners suffer the multiple impacts of London becoming an
asset class for speculative investment, where London property mutates from a
place to call home into an international reserve currency for global elites.
For Mayor
Johnson, this means serious political fallout.
Critics carp
Johnson as he ‘faffs around’ to find a practical response to London’s growing
housing crisis.
And if Johnson
doesn’t meaningfully respond, he faces historical consignment as the ‘Mayor who
sold London’ to international property speculators.
And caricature,
as a cad bounder with mad hair, who aggravated a housing crisis facing many
Londoners.
Smattering
Hence, nine
months on from LREF and Berkeley Square, ‘Sheikh Boris’ splutters a far less
avuncular and platitudinous tune to MIPIM delegates at Cannes, the
international real estate show (11-14 March 2014).
Johnson coats the title of his presentation with an academic gloss: ‘Housing in London: Population &
the Economy – meeting the challenges of 21st century growth’.
Verbally, Johnson jests
about confusion over the true meaning of MIPIM (Le Marché international des Professionnels de L'Immobilier).
He japes: “It’s
not ‘May I Push you Into the Mediterranean’ but ‘Making Important Property
Investments for Millions of Londoners on Modest Incomes’.
At last, Boris
blurts his crux.
His meaningful
response.
The Mayor
acknowledges the “stupefying torrent” of international capital inflow into
London land and property contains “a downside”.
Seriousness
replaces the Mayoral smirk.
“London is a
finite asset that is in global demand," says Johnson.
“It puts
terrific pressure on people living in London and on the domestic property
market.
“There is no
doubt for millions of people growing up in the city, searching for work, there
has never been a more difficult or challenging time to get on the property
ladder. Homes people thought they could get six months ago are now moving
further out of their reach.
“And many people
feel a particular sense of anger about one thing in particular that we can
easily tackle – the overseas marketing of new homes in London in swish
marketing suites before Londoners even get a chance to know these new homes
even exist.
“That can’t be
right.
“We want people
in great Asian capitals to come to London and invest but we don’t see why they
should be able to look at new images of new London properties and take cash out
for them ‘off plan’ before Londoners even know about the opportunity.
Paper moon
And, very
possibly, due to his fondness for history, Johnson seems highly conscious of
the perils of even mildly imitating Prime Minister Neville Chamberlain, who
waved a white paper at Heston Aerodrome – signed by Hitler and Chamberlain himself - that
signified a policy of appeasement towards Nazi Germany in 1938.
Comparing an
inflow into London of speculating property investors and corporate property
developers to a planned invasion by a hostile neo-fascist state might seem
extreme.
But Johnson himself seems to stumble into such a comparison and says: “So I have in my hand a piece
of paper…”
And even waves
several pieces in his right hand.
Johnson
continues: “This signifies the concordat we have agreed with sixty of London’s leading
property developers who have agreed that they will stop any practice of
marketing London homes exclusively overseas in advance and they will insist
that all such homes are marketed first, or at least, simultaneously, to the London and UK
market.
“You can’t say fairer
than that, can you?”
Concession
Johnson
describes this as “a small but important gesture from the property
industry”.
But is it canny appeasement or a genuine concession?
How will it be
guaranteed?
Will developers
and agents create marketing suites in London for new homes?
How anyway can
Londoners compete with foreign cash-rich buyers in Abu Dhabi, Dubai and
Shanghai?
Johnson says:
“I do hope that, given the buoyancy of the London property market, developers
will accept that a high quotient of affordable homes on new London developments
is only reasonable.”
