| Topic: | Re:Re:Re:Re:Re:Re:Re:Re:Re:Re:Re:Re:Re:Re:Re:Morrisons Supermarket site for sale! according to Kath the Editor | |
| Posted by: | Lorne Gifford | |
| Date/Time: | 02/10/15 15:46:00 |
| It can though. Capitalism is flawed only by the excesses that get allowed, and the difference between a local authority and a property developer is simply one of time. A property developer wants a return on investment, so with the current very low commercial interest rates he borrows a large sum cheaply, invests it into building lots of flats and then makes a quick return when he sells. The short termism is unfortunately fed by anyone with money in the bank. They see a very small return on bank interest so use the money instead to buy property which they rent out. This drives prices up, which makes the developer and the purchaser very happy. It's the classic bubble. The time issue comes in when you realise that low interest rates, ‘historically low’, have been with us for only 6 years. The building bubble and house price escalation followed as quickly as interest rates fell, and likewise will go the other way when interest rates increase. Property developers are living by a business model that is based solely on a temporary situation. Some developers, Ballymore for example, don’t realise their business model is so flawed and instead of building quick and selling quick are sitting on land in the hope that as Brentford becomes taller they’ll be able to likewise build taller. They don’t give a hoot about Brentford, it’s just a game of return on capital for them. This short-termism is the reason so many property development companies regularly go bankrupt. They're so blinkered by quick profits that they can't see the wood for all the trees. The council though represents the people that live in the middle of this game. They should be taking the longer perspective – is it right, does it fit with the character and heritage, etc. They should also keep an eye on what their reputations will be like in the years to come, ‘oh councillor so-and-so, he’s the idiot that allowed a 24 storey residential block to be built on the old Morrisons site.’ In a few years many of today's hot properties will be completely unsellable. It happened before, many times, and it will happen again, many times. My advice is to sit and wait, always play the long game and always resist the short-termism that is tempting but utterly flawed. |