[eBook Code] Property Boom and Banking Bust (eBook Code, 1st)

List of figures ix

Acknowledgements xi

Glossary xiii

1 Introduction 1

Sub?-prime Lending Enters the Financial Vocabulary 2

The Global Extension 5

Commercial Property Market Context 6

Commercial Property’s Role in the Wider Economy 13

Property Investment and Short?-termism 14

Measuring Commercial Property Market Performance 14

Book Structure 16

2 Long?-term Changes to Property Finance and Investment 21

The Changing Role of the Banks in the United Kingdom 21

Property Development and Investment Finance 25

The Changing Investment Landscape of the Non?-banking Financial Institutions 29

The Other Main Players in Commercial Property 30

The Changing Face of Institutional Property Investment 31

Limited Partnerships 34

Jersey Rides to the Rescue 37

Unit Trusts and Indirect Investment 39

Conclusions 41

3 Economic Growth, Debt and Property Investment through the Boom 43

Global Economic Upturn and Debt Accumulation 43

The Property Boom and Escalating Debt 46

The Cost and Role of Debt 52

Development and its Finance in the Noughties Boom 57

The Weight of Money and Moving up the Risk Curve 61

Conclusions 63

4 The Anatomy of the Property Investment Boom 65

Commercial Property, the Macroeconomy and Globalization 66

Global Property Upswing 68

Market Trends in the Property Boom – Was Something Different this Time? 71

UK Investment Trends 76

Lending To Commercial Property in the United Kingdom 82

A Property Boom in an Irrational Market 83

Summary and Conclusions 88

5 The Global Financial Crisis and its Impact on Commercial Property 91

A Crisis Unfolds 92

The Impact on Global Property Markets 95

Capital and Rental Values in the United Kingdom Post 2007 98

But This Time the Bust Was Also Different 100

Investment Trends and Capital Value Falls 106

Changing View of Risk 112

Summary and Conclusions 114

6 Property Lending and the Collapse of Banks 117

The Crumbling of the UK Banking System 118

Royal Bank of Scotland 121

Halifax Bank of Scotland 122

Britannia Building Society and the Co?-operative Bank 130

Dunfermline Building Society 131

Irish Banking Collapse 132

US Experience 136

Discussion and Conclusions 139

7 Aftermath and Recovery 143

The Macroeconomic Context 144

Property Market Trends 147

Bad Bank Debts and Impairments: The Road to Redemption 151

The Response of Property Investors, Property Funds and Property Companies 158

Property Lending Post?-GFC 161

Implications for the Pricing of Commercial Property and Investment 162

Conclusions 166

8 Conclusions 169

Globalization 171

The Boom and Bust through the Prism of Valuations 173

Role of Banking 173

Irrational Exuberance 174

Could It Happen Again? 176

What Can Be Done? 177

Final Thoughts 179

References 181

Index 191