Credit Crunch Towers

A deathly hush has fallen over the Pan Peninsula. Until recently it was one of the
noisiest areas of the property boom. Now the only clamour is the sound of buyers
stampeding for the exit.
Few places in ondon characterise so completely the gloom that has overta!en
the recent exuberance of the property mar!et" and for good reason. The
development" which bro!e all records for apartment prices in #oc!lands" was a
product of the o$%plan phenomenon. &t attracted speculators in droves. They saw
an opportunity to buy at a discount before even a bric! was laid and dashed to
place deposits. Now the rush is in the opposite direction.
&t's happening all over ondon. (uyers are wal!ing away from deposits rather
than completing on properties now worth far less than they agreed to pay for
them. &n many cases" even if they wanted to complete the deal they can't"
because mortgage funds have dried up. This is the unseen side of the property
crash and its full e$ects are yet to be felt.
The Pan Peninsula pro)ect is due to be completed early next spring" ahead of
schedule. For months" a sign has hung outside the towers boasting that all *ats
are sold. The sign is a relic of better times. +ne property website alone currently
has almost ,-- advertisements selling *ats in the development. .any are being
sold by investors hoping to recoup what they have spent on deposits. &n some
cases" the sums are over /,--"--- and hopes of recovering anything li!e this
amount are fading fast.
The man behind Pan Peninsula is 0ean .ulryan" one of &reland's richest tycoons.
A stonemason by trade" he named his company" (allymore" after the town in Co
1ildare where he started his building 2rm in ,345. &n ,- years" he had moved to
ondon and (allymore is now one of the ma)or developers in (ritain and 6urope"
with a property portfolio valued in excess of /, billion.
.ulryan is among the most successful of the current generation of Celtic tigers.
i!e his contemporaries 7ohn .agnier and 7P .c.anus" he has an impressive
string of racehorses and has invested in 6nglish football" ta!ing a sta!e in
0underland FC.
8hen he launched the Pan Peninsula development three years ago" there was
intense interest" especially among property professionals. (allymore's daring new
towers" one standing 9- storeys tall at :43ft" the other a little lower" were not )ust
the highest of high%rises" they also promised to be the best.
6very apartment" from studios to the penthouse" was designed with *oor%to%
ceiling windows. The views from the riverside bloc!s were exceptional" with a
glimpse of the sea possible from the upper *oors. The 2tting%out was exceptional"
with high%;uality !itchens and bathrooms.
6ven more impressive was the mar!eting. Pan Peninsula was sold not )ust as a
place to live" but as a way to live. <esidents of the =>5 apartments were
promised a ?signature? restaurant" a health club and spa" a private cinema and a
coc!tail lounge on the 9-th *oor.
They were also o$ered an entr@e to the Auintessential concierge group which
lin!s its clientele to the world's most exclusive and expensive shops and services.
#oc!lands property prices have always lagged behind ondon's more established
areas such as Chelsea and .ayfair but the two towers helped the area stage a
;uantum leap. The /,"--- a s;uare foot barrier was bro!en for the 2rst time in
sales at Pan Peninsula. 7ust before Christmas 5-->" (allymore announced it had
sold the penthouse for /= million" believed to be a record for east ondon.
.oc!%ups of the apartments were created on a barge *oating on the Thames
close to the rising towers. Plans of the development were on display and
purchasers were able to choose their *at from those that remained. &n those early
days" studios were selling for around /533"---" one%bed *ats cost around
/:--"--- and larger ones clustered around /=--"--- and above.
At the time" ondon property prices were rising at a giddy rate. 0ome estimates
suggested gains of 5- per cent a year. (uying o$%plan at a place li!e Pan
Peninsula seemed a one%way bet. 0oon the website carried a notice advising
everything had been sold. The mar!eting suite number was disconnected.
For those who had bought in" by placing a ,- per cent deposit" it seemed all they
had to do was wait for prices to rise suBciently and then ?*ip? the property by
selling the option for a pro2t. 0ome did. Pan Peninsula attracted investors from
the City and Canary 8harf" most of whom were 2nancially astute.
&t was estimated that >9 per cent of those buying o$%plan were single men
loo!ing for an investment. Around 5- per cent were single women professionals
!een to ac;uire a smart #oc!lands home. There was an uncon2rmed report that
9- per cent of the purchasers of the *ats in the second tower" located to the west
of the site" were &rish investors.
&n the City bonus frenCy of early 5--=" money poured into (allymore. The
company planned another huge tower" this time at Piccadilly" .anchester. That
pro)ect has now been shelved.
As a development" the future of Pan Peninsula is assured. 8or! is said to be
several months ahead of schedule and the towers appear to be almost 2nished.
(ut as an investment" the immediate future is far less rosy. A local estate agent
revealed that a client bought a one%bedroom *at two years ago" o$%plan" for
/:5-"---. 0o far he has paid two deposits totalling 5- per cent of the price" )ust
over /4-"---. Now the *at is thought to be worth only /D=9"---. Ee is trying to
sell for that price. &f he can sell" it will limit his loss to /:9"---. &f he cannot" he
faces losing his deposit of more than /4-"---.
?Ee has to ma!e a decision"? the agent said. ?#oes he complete and wait for the
value to go up" or does he wal! away" sacri2cing his depositF +ur advice is to go
through with the deal and rent out.?
This was the advice being given by Foxtons" who are trying to sell nine *ats in the
development. &f possible" a spo!eswoman said" it was better to complete and rent
out until values recovered.
Not everyone can a$ord this option. A <ussian investor who is trying to sell two
*ats privately at Pan Peninsula said the downturn had thrown his investment
plans into chaos.
?& bought two two%bedroom apartments" one ;uite large for /==-"---. Now &'m
trying to get /==9"--- for it but it's not loo!ing good. To be honest" &'m very
disappointed. & can't a$ord to wait for the mar!et to recover. From what & can see
now people are not buying because they thin! the mar!et still has some way to
go before it bottoms out. & )ust don't !now how much &'ll lose. .y strategy now is
to try to get buyers in <ussia or perhaps 1aCa!hstan. &f the worst came to the
worst" & suppose & could live there.?
The o$%plan phenomenon was more a feature of the recent property boom than
any other. The incentive for buyers" in a decade when prices trebled" was huge.
(etween reservation" exchange and completion" properties were soaring in value.
0peculators had no intention of moving in. Eundreds of thousands of pounds
were to be made without so much as lifting a tea chest.
The idea also spawned much%criticised ?investment clubs?" which persuaded
people of limited means to invest in unbuilt property on the understanding that
they would pro2t from big price rises before they needed to pay up.
&n a bloc! of *ats near Gictoria" two%bed *ats were available o$%plan for />9-"---
in +ctober 5-->. At the time of their completion" a year later" local agents were
;uoting /39-"--- with a waiting list. Now owners loo!ing to sell are receiving
o$ers no higher than the />9-"--- they paid.
At Arsenal's old stadium in Eighbury" now a =--%unit residential development" o$%
plan buyers have been wal!ing away from their deposits. As the 6vening
0tandard revealed last wee!" a large number of those who paid ,- or 5- per cent
deposits have seen their /9--"--- *ats plummet in value to around /:--"---.
(uyers have lost interest and investment clubs have all but disappeared.
(allymore declined to give details of how the Pan Peninsula development is
wor!ing out. A spo!eswoman said the company was ?comfortable? with progress
and interest remains high. &t was" she added" ?virtually sold out?.
8or!men are 2nishing o$ the health club and coc!tail lounge. 8hatever the
mar!et does" the view from this 9-%storey eyrie will be undiminished" even if
some residents 2nd themselves sipping their caipirinhas through gritted teeth.