November 2008 Archives

St Paul's cathedral has been the centre of many decisions regarding planning issues throughout the capital, especially over recent years. With development applications taking longer and being subject to greater restraints there have been many obstacles for planners to overcome and several new landmark developments, such as Arab Investments "Pinnacle Tower" and British Land's "Cheesegrater", have been delayed due to sighting corridor issues to protect the views of one of London's historic buildings.

But despite the occasional mention, the cathedral itself has seen little attention, until recently. It has been reported that the £40 million restoration target has now been raised, and finally on its 300th anniversary the landmark can begin to be restored to all its former glory.

The money was raised solely through donations and the works are expected to complete in 2010.

It's nice to see that even when money is tight, people are still keen to maintain the attractiveness of the London skyline.

So Chancellor Alistair Darling has now conceded that the empty building tax needs to be suspended, but is this too little too late for those which have already suffered from its implementation, and could this actually be detrimental to future change?

After a long, drawn out decision to bring in the highly controversial requirement to pay full rates on empty commercial properties, which came into force in April 2008, we are now seeing some relief being offered, for smaller scale owners at least. The decision to drop the tax on properties that pay less than £15,000 in business rates, apparently 70% of all vacant buildings in the UK, for the 2009-2010 tax year has also come under scrutiny of those in the real estate market.

Some opponents, which have been campaigning to have the tax dropped completely, including Legal & General and Land Securities, are not going to be best pleased with this short term focussed decision. Liz Pearce, the chief executive of the British Property Federation, said the change would help only the very smallest property owners, adding that this is a measure designed to help votes not business.

And what about those which felt that there was no option but to demolish their vacant properties to avoid such charges, what have they been left with other than a pile of bricks?

Surely the government should have assessed the situation better before trying to offer a quick fix solution which will continue to be detrimental to many during the period of recovery.

There have been many consequences of the credit crunch and an increase in bribery and fraud could be another one.

Rosana Mirkovic, a senior policy advisor for small and medium sized enterprises (SME's) for ACCA, has painted the picture that SME's could be at greater risk of being tempted by corruption in these harsh times.

With a severe lack of debt available in the current market and the drying up of affordable credit and subsequently working capital, there are growing fears that many will begin to resort to desperate measures to keep their businesses afloat. It is believed that the SME's may be more at risk to exposure of such pressures than larger firms as they tend to wield less power in the business relationship chain.

But any company which regularly accepts bribes is likely to have increasing outgoings from their revenues, a cost which inevitably gets passed onto its shareholders. And with fewer resources, smaller client bases and tighter profit margins, SME's which opt to go down this route are likely to feel the squeeze even more than they already are.

A survey carried out by PricewaterhouseCoopers has found that 63% of companies have experienced actual or attempted corruption and 45% said that they had not entered a specific market or pursued a particular business opportunity because of corruption risks.

Despite more protective measures being put in place, an estimated £1 trillion is paid each year in bribes, and it will be interesting to see how much more tempted businesses will be when dealing with a downturn.

It has been reported that British chief executives are narrowing the gap with their US counterparts according to a study of executive remuneration.

Research conducted by management consultancy Hay Group, found that UK chief executives are the best paid of the major European Union economies. British bosses are second to only Switzerland, while US chief executives now only earn 50% more than those in the UK, compared to almost twice as much a year ago.

The structure of executive pay is also highly variable, with British companies paying an average base salary of €1.31 million, well behind the Italian average of €1.93 million, but making up the shortfall by offering bonuses of almost 1.5 times the salary.

With the investment market still in freefall those with sufficient funds are pondering when the best time to buy shares will be.

Split views have been seen this week in City A.M.

Gary Mairs of private equity company Folio Partners stated the following:

"I think that now is a good time to start buying shares. It might not be the cheapest price you will get, but if you hold out waiting for the bottom price, you'll never get it. As for the current market instability we're facing, it might affect the price of your trade short term, but if you're investing for the long term - the only way you should be investing - you'll make a good profit."

Jo Blaney of Blaney Personal Banking Recruiters takes as slightly different approach:

"I don't think now is a good time to buy. The economic downturn is factored into share prices, and the end of the crisis is not yet in sight. What we are seeing right now is banks' share prices falling, but we've yet to see the true impact on the rest of the economy. Companies which rely on consumer spending are only just beginning to fall, and that is when share prices will really drop. There's a way to go yet."

And finally, Robert Trzyna of DTZ Property Advisors predicts a medium of the two, stating:

"It's not the best time to buy. Although the market has dropped significantly, I personally think the equities market still has a long way to fall, and shares will get cheaper. If you do get into buying shares, you'll probably see losses before you see gains. I'm not expecting to see a recovery anytime soon. That said, you can never know exactly when it's a good time to buy, until it's too late."

Some interesting points are thrown up by this discussion, but the underlying factor remains, there are opportunities arising but those investing in the short term are likely to suffer the rocky road ahead.

'Throw something at it!' shouts a mate. Well, what would you do if your sledgehammer couldn't shift it?

Riverside South may be under construction but there is much concern over how the new development will tie into the already established area.

This concern has subsequently led to a planning application being filed for the construction of a tunnel link to make it easier to incorporate the scheme with the already existing tower blocks which grace the Canary Wharf Estate.

Spanning Westferry Road, that predates the development, the application proposes that the tunnel not only spans the road, but also provides direct access to Riverside South from Canary Wharf's underground and DLR stations.

The 45 metre long structure of the bridge will allow panoramic views to and from Canary Wharf, with natural ventilation keeping the glazed access cool in the summer months.

But in these concerning times, with developers lacking funds, will this vision simply end up as another proposed architectural masterpiece placed on the scrap heap?

The Bank of England's monetary policy committee announced this morning that interest rates are to be cut to 3%, the lowest level since 1955.

It is the first time since the MPC was formed in 1997 that it has moved interest rates by more than half a percentage point. The Bank itself, however, cut rates by a full percentage point in January 1993 to 6 per cent from 7 per cent when economic conditions clearly warranted it.

"The past two months have seen a substantial downward shift in the prospects for inflation in the United Kingdom," the Bank said in a statement. There has been a very marked deterioration in the outlook for economic activity at home and abroad. Moreover, commodity prices have fallen sharply."

"Since mid-September, the global banking system has experienced its most serious disruption for almost a century, it added. "While the measures taken on bank capital, funding and liquidity in several countries, including our own, have begun to ease the situation, the availability of credit to households and businesses is likely to remain restricted for some time. As a consequence, money and credit conditions have tightened sharply. Equity prices have fallen substantially in many countries."

This cut of one and a half percentage points should help to ease conditions in the credit markets, and allow banks to pass the benefits on to their customers. However, whether this will occur is still unknown, with banks likely to be keen on balancing their own books before passing on to others.

What are your views on the inflation rate cut and do you feel some sort of regulation should be enforced to ensure the benefits are passed on to consumers rather than fund the bonuses of bankers?

The iconic building of London has wowed many a tourist by its curvaceous glass appearance since its completion in 2003 and opening in 2004. But have we been somewhat misled by an impressive illusion?

The Foster and Partners 591 sq ft office building, constructed by Arup and Skanska, has been used to resemble London's dynamism as a City location in many different projects including the application for the 2012 Olympic games. The City tower also seems to remain relatively timeless in appearance despite plans for many more modern / state of the art landmark buildings, like the Pinnacle and Cheesegrater, set to grace our skyline.

But despite its overall curved glass shape, there is actually only one piece of curved glass on the entire building -- the lens-shaped cap at the very top.

A pure triumph in terms of architectural deception.

It's here. After nearly 10 years online, This is Money is making its first foray into book publishing with a 'light-hearted but deadly serious' guide to surviving the credit crunch.

View image

It is winging its way to all the good bookshops but is currently cheapest online at Amazon (£6.64), where delivery is free on orders over £5.

So if your finding that your digging dangerously deep into your pockets it may be worth considering a punt on this title, it could turn out to be the best few quid you ever spent.

To order a copy click here.

Hayes Davidson, specialists in creating images of cities and architecture which is yet to be built, present an interesting image of what London may look like if the likes of the Pinnacle, Cheesegrater and Walkie Talkie Tower do get built.

However if all these developments are completed what are the restrictions likely to be for future development, and are applications likely to be dependant upon protecting the viewing corridors to these futuristic style skyscrapers limiting London's continued development?

With the UK economy heading for recession many are watching their penny's and ensuring they have enough for the storm which lies ahead. However, with costs of living rising many are also relying on their borrowing facilities provided by banks.

Either way once a month you will hear the post land on the door mat containing a statement of credit or debit.

But isn't it strange that the banking industry, unlike most others, take the view of the consumer, stating your current financial status rather than the business itself. If you owe money to the bank, surely, for the bank, it should show as a credit as the bank is now owed money and will earn interest off of your borrowing. And likewise for the opposite scenario, if you have money in your account interest will be paid to you resulting in a debit to the bank.

In these uncertain times, maybe this reverse approach would act as an additional reminder to lenders of their financial status and reduce the number of foolhardy investments undertaken in the future.

In these troubled times it tends to be concerns surrounding big businesses which make the headlines, but it is important to remember that smaller firms are just as fundamental to the success of the city market as large global conglomerates are.

Across the City and fringe regions the diversity of these SME's is huge, spanning from highly specialised financial or business - service firms with few staff but a global reach, right through to the likes of print suppliers, caterers and cleaning contractors.

To many the word SME applies to the key building blocks of the real economy and as the economic crisis continues many of these firms are begging to struggle, particularly due to the lack of available credit.

The EIB (European Investment Bank) now has £4 billion ready in loans for UK small businesses over the next four years, with the speed of support increasing and the conditions attached becoming more flexible. This should help with sheltering some from financial woes and ensure that the underlying future of the UK economy remains sound.