During the Georgian era, large tracts of London were owned by Britain’s dukes and earls who were the high net worth individuals of their day. Today, this model of development is back.
“Streets of Gold”, a survey of world cities by Savills published this month and released exclusively to House & Home, points to the key role that wealthy individuals are playing in world property markets by rescuing development from the ravages of the financial crisis. According to the report, more than half of all major global real estate deals are now led by private individuals, in contrast with the debt-based model of property finance that collapsed when banks stopped lending to property groups.
“Since the debt crisis they [private individuals] have stepped into the property deals that corporate bankers have deserted,” the report states. In 2012, about 35 per cent of global big-ticket deals – defined as $10m-plus – were only possible because of private funding. “The willingness of private wealth to take the place of debt finance, or to take a high-risk development position, is now making the difference between deals done or schemes mothballed,” the report says.
Yolande Barnes, director of Savills’ world research arm, points to a number of recent developments in London. They include the Olympic Village, which was bought by Qatari Diar, the property branch of Qatar’s sovereign wealth fund, after the UK government bailed out the project following the financial crisis. The Shard, London’s tallest building, is 95 per cent owned by the state of Qatar. One Hyde Park is owned by a joint venture between Sheikh Hamad bin Jassim bin Jabr al-Thani, Qatar’s former prime minister, and the Candy Brothers. In south London, the billionaire Chinese developer Ni Zhaoxing plans to build a replica of the 19th-century Crystal Palace.
There is no doubt that the involvement of wealthy private individuals is a key reason why development in London and other world cities is continuing. In contrast, activity in the rest of Britain has all but ground to a halt since 2008 and towns and cities around the country are characterised by empty construction sites. In Bradford, West Yorkshire, for example, the property company Westfield planned to build a 23-hectare, open-air shopping mall, but after several years of inactivity the site remains no more than a hole in the ground.
While many, particularly in the property industry, welcome the input of private investors, others question the consequences for those areas attracting their investment. Concerns range from the spread of “ghost towns” in super-prime areas of London where investors “buy to leave”, to the rollout of privately owned estates.
During the early 19th century the private estates which now make up some of finest parts of Britain’s urban heritage were closed to the general public. There was huge public protest in the mid-19th century, prompting two parliamentary inquiries, which resulted in these gated areas being made accessible to all.
Over the past 15 years this hard-won democratic achievement has gone into reverse as the template for regeneration has emulated the pre-democratic model pioneered by the aristocracy of Georgian England.
In place of individual private landlords, large corporate players have started to take over parts of the urban fabric in the UK and other cities around the world. The result has been the creation of private estates, from Liverpool One, which spans 34 streets in the heart of Liverpool, to Cabot Circus in Bristol and Stratford City in London, where streets and public places are privately owned and policed by private security. Rules in these estates typically include bans on cycling, busking, taking photos and political protest and even restrictions on eating and drinking in some areas.
City rankings offer only a partial view, showing cities as places where super-prime property is celebrated, while the segregation and polarisation which also defines the global city is glossed over.
The Savills survey is just one of a clutch of reports defining the characteristics of the global city. Barely a week goes by without the publication of the latest rankings, with the top spot a badge of honour, spawning column inches lauding the success of the “winning” city. In recent years this has often been a two-horse race between London and New York, with the latest survey, the Global Financial Centre Index compiled by consultancy Z/Yen, knocking London off its perch.
Global city surveys are also popular within the property industry. As well as Savills, Knight Frank publishes a Global City Survey, while certain academics have made their name promoting city rankings, such as Richard Florida, whose work focuses on the importance of a “gay index” and a “bohemian index” for cities.
Saskia Sassen, professor of sociology at Columbia University, who first coined the term “global city” 30 years ago, is dismissive of the global city rankings industry and much of the discourse around the subject. “It’s a very partial geography. It’s a tool that consulting firms can sell, that allows people to make an argument and say ‘come and invest here’,” she says.
Planning academic Michael Edwards believes the rankings foster a one-dimensional perspective of cities and emphasise the importance of super-prime real estate at the expense of the housing affordability crisis which has come to define a city like London. “It treats the relationship between places as though it were an Olympic sport, with medals. It is not. It is a complicated codependence and, at best, co-operation,” he says.
The tendency of the rankings approach is to focus on the defining characteristics of the global city. Richard Florida, for example, devised his own rankings system, claiming that the presence of a certain proportion of lesbians and gay men indicated a higher level of economic development in a city. The Savills report relies on more conventional criteria, such as the number of skyscrapers and a city’s population density.
What is striking about this set of charts is that despite London’s status as one of the world’s leading global cities, it boasts a surprisingly small number of tall buildings. Compared with Hong Kong’s 293 buildings over 150 metres, London has only 12 buildings of comparative height. In part, this is testament to the protective view of London’s skyline promoted by planners but the UK capital has a sizeable number of tall buildings that have received planning approval and are due to be constructed over the next few years.
This trend is explored in research by New London Architecture, a think-tank, which reveals that 236 towers above 20 storeys are in the planning process at the moment. As a result, the Mayor of London’s planning framework makes provision for 20 tall buildings without specifying their height, but none of the applications is for buildings under 100 metres.
It is clear from this that London’s mayor Boris Johnson and the Greater London Authority believe that a large number of tall buildings is necessary to burnish London’s image as the world’s leading global city. The result is that the London skyline is set to change dramatically, although few realise it as yet.
Beneath the glittering pinnacles of the early 21st-century global city there lies a more complex reality, involving a city whose development is being driven by the extreme wealth of a small number of individuals.
Anna Minton is the author of ‘Ground Control: Fear and Happiness in the Twenty-First-Century City’, published by Penguin. She is the 1851 Royal Commission Fellow in the Built Environment