February 2010 Archives

Three stories of interest from Saturday and Sunday: The first is Rightmove's perhaps mistaken optimism in the FT on Saturday. The second is the sale, for what appears to be not very much, of Liberty's by Marylebone Warwick Balfour in EG on Saturday, which was picked up by the Telegraph. Third, is another Candy Brothers stab at wounding Prince Charles in the battle of Chelsea Barracks, relayed by the Sunday Times.

Residential Web site Rightmove produced humongous profits of £37.8m on turnover of just £64.9m in 2009. Chief executive Ed Williams said that future profits were based on the "willingness of advertisers to pay more." Well, good luck Mr Williams. The fact that your margins are so high and you want them to go higher reinforces the point made in my EG column on Saturday that Google may destroy your business model with a free offering.

MWB is one of those property businesses that makes your head hurt. Its CEO Richard Balfour Lynn is so clever and has his fingers in so many complicated deals it is very hard to work out if the company is doing well or badly. Well, it would appear today. Badly in 2002, when he promised to wind down the business. This was a couple of years after MWB paid £73.5m for the Liberty store group. Now EG says the store itself is to be sold for £40m. Will that be at a profit or a loss? Who knows?

On Friday the Candy brothers finally lost control of that $500m development in Los Angeles when the banks foreclosed on a $365m loan. But Nick and Christian are nothing if not resilient. There is a tale of them being "poised to bid" for the Grosvenor House in the Sunday Times. Another part of the paper contains chunks of the complaints made by Prince Charles to the Emir of Qatar  over Chelsea Barracks, where once the Candy's were their development partners, before a terrible falling out.

The brothers are pretty much guaranteed an £80m payout when planning is granted. But they would quite like the money now - or a £67m "p-off" sum stipulated in the contract. This latest salvo brings closer the link HRH to London Mayor Boris Johnson, and thus increases the embarrassment for Charles for interfering with the democratic process, rather than just moaning to a fellow royal.

The key sentence in the story reads: "documents released under the Freedom of Information Act also show that a meeting took place between Sir Simon Milton, head of planning for the mayor of London, representatives of Westminster council and Sir Michael Peat, private secretary to the prince." Will this be enough to embarrass the Qatari's to settle? No idea.

Today's FT picks up on yesterday's EGi story that the "Walkie Talkie" tower might get built, as developer Land Securities admits talking to builders about the cost of the 500 ft tower in the City. This story puts Land Securities cautious optimism in stark contrast to Hammerson's caution earlier in the week - and leaves City viewers wondering which way British Land is going to jump on its "cheese grater" tower. (A guess; towards Hammerson )

Talking of towers, today's Standard column contains a tale about the Pinnacle, which will be the City's tallest tower at 945ft - if Arab Investments push the pre-lets on the 1m sq ft building up from the current 250 000 sq ft to over 400 000 sq ft. A visit to the site on Monday found builders Brookfield feeling hopeful that a deal of more than 200 000 will be signed with a single tenant this year with someone who is advanced talks with Arab Investments.

If that happens, the developer will be given the cash by their backers to pay Brookfield the £593m to build the 72-storey superstructure. And if that happens, something rather pleasing for the City will happen as well. It has known for some time that the top five floors have been reserved as a viewing gallery. What has not been known is that Arab Investments have done a deal with the Museum of London to fill the viewing galleries with historic artefacts.

A detailed exercise has been done showing the Pinnacle could attract as many as 1.2m visitors a year to the 872-ft high galleries. Letting agents need not worry. The bottom floors of the Pinnacle have been designed to bring tourists in on the ground floor and office workers in by a separate entrance up to a mezzanine level that will be strictly off-limits to backpackers.

PS: a separate story in the Standard column discusses the Conservative plans to introduce "third party" appeal rights for planning applications,  a decision condemned by the British Property Federation as a"recipe for chaos." Relax guys, an extremely well-informed source in the party says the chance of this silly idea becoming law is close to zero. Right now we are simply in the pre-election posturing period.

A National Audit Office report today suggests that it is "increasingly likely" the £9.3b Olympic Games budget will be meet. That won't be difficult, given the NAO calculation that there is still £1.27b in the contingency fund. 

As was suggested here in December,  the budget is stuffed with contingencies.Today the NAO reveals that a figure of just £501m in sales receipts for the 2800 flats is all that is anticipated in order to make this current budget work. At £178 000 each, they sound quite a bargain.

It will be interesting to see just at what point in time it will be officially admitted that the games are going to cost no more than £8b: - and who will take the credit. Boris, probably, even though it was Gordon Brown, when Chancellor, who insisted on the £2b contingency.

Today the Times signals the end of an expansionist BBC. The story neatly knocks off the agenda a shocking report on its expansionist property agenda published yesterday by the National Audit Office. So it is probably best to look at the report itself. Three things stick in the craw after reading the 45-page document, which investigates BBC supervision of three development projects in London, Manchester and Glasgow built in the last seven years.

The first item to make you gulp is the staggering cost: Broadcasting House in London £1046m; Salford Quays in Manchester, £879m and Pacific Quay in Glasgow, £188m. That's not far off £2b to provide a total of 1.6m sq ft of space - although it does include rent for the next 20 to 30 years.

Second, it is hard to swallow the BBC Trustees excuses, spread like balm oil over the first 15 pages. They can be summed up thus: "Before we got a grip in 2006, it was all a terrible mess. Nothing to do with us: the management were naïve and stupid. Thanks to our decisiveness and intellect, the projects were hauled back on track."

But what will really choke the licence-fee paying reader with rage are some of the items shown in the detailed cost breakdown. A huge £269m of the £1046m cost of broadcasting house is the price paid for raising an £800m bond to pay for works and 30 years rent to the investment vehicle which raised the money. Let's not touch the programming budget, shall we?

On Pacific Quay the building costs jumped from by no less than 51% from £64m to £97m. There was one ray of sunshine, in Manchester believe it or not. Because the Corporation chose to rent from Peel Holdings at Salford Quays, the budget for renting the studios for 20 years has fallen from the £306m estimated in boom time 2006 to the actual deal done which will cost £233m over 20 years.

Even so, the BBC remains wary of private landlords. Peel Holdings is now having its "financial stability" investigated say the NAO - at yet more cost no doubt.

Today the news is mostly about the US embassy. But there is a tale in the Times "revealing" what was revealed last Saturday in EG - that Shell are going to abandon the Shell Centre and take 200 000 sq ft at Canary Wharf to allow the redevelopment of their old South Bank site; an idea that seems to have been around since oil was $20 a barrel. It looks like CBRE convinced the paper the story was worth recycling.

Yesterday's launch of the new US embassy was a curious affair; TV cameras almost outnumbered reporters. But the Americans were politely determined to be as transparent as possible. After a speech from the Ambassador and the winning architect in a basement room of the Building Centre in Store Street, it was upstairs to look at the winning design and the three losing submissions.

The new embassy will be an exact cube; 56 metres in every direction sat on top of a podium about 9m high. There are 11 floors (above ground anyway) and about 450 000 sq ft of space for the 1000 or so staff who will decant from Grosvenor Square in 2017. The whole thing will cost $1b (not including a still being disputed VAT payment) and will be paid for by the sale of the embassy in Grosvenor Square and the sale of the old Navy buildings across the square.

Not much of this information appears in the papers. There is a snooty dismissal in the Guardian by Jonathan Glancey of what we'll call "The Cube" and an interesting revelation that a couple of the English jurists, including Lord Rogers, preferred a scheme by a guy called Thom Mayne. These spats, so beloved of the architectural profession, will run for a bit. The Mayne scheme? A crooked three-sided block open to the river resembling a clothes-peg.

Hammerson chief executive David Atkins is clearly more tortoise than hare. In fact the 43-year old surveyor was known as "plodder Dave" by colleagues in a former life. This may help explain the overly-cautious tone he took yesterday with the City and the media. Atkins did not win over converts by telling the world that it is too early to start developing in the UK without pre-lets and, anyway, France looks rather more alluring than Britain. He has clearly not been well-advised on the joys of ambiguity.

Brokers Collins Stewart issued a "sell" note saying Hammerson "lacked conviction". This morning the Wall Street Journal reminded the world that the business sold £780m of property at the bottom of the market and does not seem to know what to do with the £548m raised in a rights issue from shareholders. "Whether this play it safe approach will be sufficient to keep it ahead of rivals' remains to be seen" says the WSJ.

For those wondering why the European edition of the WSJ takes an interest, it is worth remembering that former Times City editor - and one-time property journalist - Patience Wheatcroft is the formidable editor. For those wondering if being a tortoise is better than being a hare right now, the answer to that will only become clear this time next year. If the market has soared, Atkins stock will slump. If the market has slumped, his stock will soar. For what it is worth, Hammerson's stock price slumped ever so slightly yesterday.

The bad news today is that Hammerson lost £453m in 2009. The good news is that this is a great deal less than the £1611m lost in 2008. The results also show a significant reduction is debt, from £3.3b to £2.1b. The business is clearly taking a turn for the better.

But like its peer group Hammerson will come out of the recession much slimmed down. That £1.2m debt reduction programme was carried out by selling £1b of stock from a portfolio worth £6.4m in January 2009. Today Hammerson holds properties valued at £5.1b. In January 2008 the figure was £7.25b.

The other bit of bad/good news comes from the Times today. The paper carries an un-sourced story suggesting that JP Morgan is thinking about breaking an agreement made in the dark days of November 2008 to relocate to Canary Wharf from the City.

It would cost the US investment bank £76m to break the £237m deal to build the 1.7m sq ft HQ on the Isle of Dogs - but there is apparently an option to pull out before 2010. That is presumably why JP Morgan is now looking at other options - and those that it has been talking too have told the paper.

If true, this will be bad news perhaps for Canary Wharf. But it will be good news for the City - and maybe even Hammerson, who had a development agreement to build a new HQ for JP Morgan on London Wall.

It is gradually becoming clear from a hint here and a nudge there, that the Broadgate Office complex in the City of London is going to look very different one day. On Friday the FT quoted CBRE who reckon there is "considerable retail potential" amid the 16 large office blocks now owned in a 50:50 JV between British Land and Blackstone.

In 2006 the then chief executive of British Land, Stephen Hester, presented a "2020 Vision" for the 30-acre site mostly built in the 1980's. That envisaged doubling the size of the office space. Since then the City Corporation seems to have discovered an affection for retail. The FT article perhaps went a bit far in suggesting that the square mile could "rival the West End" with 1.5m sq ft of shops in the pipeline.

But "sources close to British Land," as they say, did hold up a fresh version of Hester's 2020 Vision last October.In a post here, it was suggested that the 4.2m sq ft of space could take a much heavier ratio of retail and leisure than the scattering of small outlets round the ice rink.

A view reinforced by listening to long-time chief planner Peter Rees (no mean shopper himself) talk at a conference at the time of a new "un-square mile" with lots of lovely shops. Where would they go at Broadgate? Easy really - on the bottom two floors of three or four of newly rebuilt blocks closest to Liverpool Street station. And who needs an ice rink?

First, a declaration of interest over a story in Property Week today. This suggests that former LandSec's development director Mike Hussey is eyeing up a three-acre site at St Bartholomew's hospital. He is not alone. I live in a residential block where half the 45 flats overlook the wards, clinics, and a tall-tower nursing home. All these become redundant this year after the commissioning of a brand-new set of hospital buildings is complete. (Declaration of non-interest - I look the other way).

For a while now, men with clipboards have been wandering around, looking up quizzically and making notes. Four months ago well known office architect Rab Bennetts was escorted down the ancient alleyways by a very well-known agent. Since then at least four survey parties has been clocked. It is expected that the hospital trust, who were at one time being advised by old-time developer Martin Landau, will select a development partner this year.

Delancey very nearly bought into the site in 2004, but Jamie Ritblat pulled out at the last minute. LandSec's certainly had a look, hence, presumably, Hussey's interest. There is plenty of potential to redevelop the crumbing hospital buildings around the existing rather pleasant square. But at the centre of this square stands the Butchers Livery hall. These guys will get very red faced indeed at any attempt to quintuple the square footage.

They could of course be offered a large wedge to go. But that seems unlikely. After the 2004 round of inquiries, the City Corporation quietly extended the borders of the nearby conservation zone. Ripping down everything and covering the land 500 yards north of St Pauls with office blocks is not really an option now, despite what PW says. But what is? Well, as ever, that will depend on what those casing the site really think they can get away with. Jones Lang LaSalle has the very delicate job of advising the hospital trust.

What on earth is British Land doing even attempting to set up a joint venture with Barratt to develop the 68-acre Silvertown Quays project in the Royal docks? The news today on EGi that the UK's second largest property company contemplated getting involved in a now-aborted deal with Barratt's to build nearly 5000 homes in the badlands near City Airport will shock the old guard.

Lord knows what BL modern-day founder Sir John Ritblat would think: but it adds credence to the view that the new MD Chris Grigg actually means it when he says he wants to change the nature of British Land. But into what? The Wall Street Journal took a sceptical view last week in a very damaging appraisal of Grigg's strategy.

 
BL seems to have suffered what Land Securities would call an "Ebbsfleet Moment." Except in the case of LandSecs, newish (and now departed) directors persuaded the company to buy a huge housing and office site in North Kent which is now being not-very-enthusiastically developed in a slow and halting manner.

Or maybe the sceptics have got this all wrong? Grigg and his new head of strategy Jean-Marc Vandevivere may be right: BL needs to reinvent itself. Why not take a few more chances? The Royal Docks is not Mars after all. We can do this sort of thing. Building houses is not just for house builders. Well, OK, maybe. But, right now, it feels very much like Grigg is inching way out of BL's comfort zone. But as the Wall Street Journal caustically asks:in which direction?

Three interesting stories this morning: the first in the Telegraph gently turning the heat up on Roger Bright, the amiable chief executive of the Crown Estate; the second in the Times giving a good kicking to the pleasant head of the Homes and Communities Agency, Sir Bob Kerslake: the third on Bloomberg, relating how the pleased the Irish Government is becoming with the UK property market.

Roger Bright faces a normally routine Treasury Select Committee in early March. But long-gestating plans to sell a stake in Regent Street have unsettled MPs; as have the plans to flog 1300 homes owned by the Crown in London. (You might want to look at last Friday's Standard column to see why). Professional reaction was summed up yesterday by the MD of a London Estate. "You have been handed this real estate on plate Roger. There are no possible circumstances in which it should be given away."

Bob Kerslake has been attacked in the Times, following a spirited campaign in Building Design demanding he names house builders guilty of building gimcrack developments that fail to meet the HCA's "quality of life" standards - in other words, they are building shoe boxes. All power to BD: last night an apologist for the Home Builders Federation repeated on BBC London TV the house lie that his members only built homes half the size of the European average because land is so expensive.(Absurd;if there were mandatory minimum space standards, the cost would simply come off the price of the land.)

Finally, it seems that that rising UK real estate prices may ease the pain at NAMA, the Irish government's lifeboat for its over-adventurous property developers. Bloomberg reports that 21% of the 80b Euros in NAMA loans are on UK property, where prices are rising fast. That is the good news. The bad news is that one of the biggest loans (about £400m) is against the £3b Battersea Power Station: not a place where the value is liable to shoot up anytime soon.

Today the FT picks over Saturday's EG story covering the latest failure in the continuing disaster that is the Morgan Stanley Real Estate Fund: MSREF has been forced to hand back 28 sets of keys to RBS on a German portfolio once worth 2.1b Euros. This follows close on the heels of the abandonment of Morgan Stanley's interest in the 1.5m sq ft Goodman's Field site in the City of London.

There is more, much more. These failures follow two huge "reverse-key" ceremonies in the US. In November Barclays Capital took control of the 17m sq ft Crescent portfolio in America, once valued at $6.5b. In December the keys to five office towers in San Francisco were surrendered to Area Property Partners by MSREF at the urging of lenders.

Morgan Stanley's global property misadventure must be causing great internal pain to a business once over-proud of its abilities and still inclined to secrecy. It can't be fun for the once-masters of the real estate universe to be sitting on the wrong side of the work-out table in meeting after meeting. 

The scale of the disaster is hard to figure out. Discovering how each fund is performing is not easy. But the size of the issue can be glimpsed at in the 2009 accounts. There were property write-downs of $1.9b in the final quarter alone - including $700m on the Crescent portfolio.

It was all supposed to be so different. In the five years to 2006 Morgan Stanley boasted it had spent $75b worldwide on property. By then the then global co-head of MSREF, John Carrafiell, was running a business that had become the biggest property developer in Europe with a $20b pipeline. "This represents a level of commitment that I believe other organisations, because they are smaller, couldn't come close to." Just as well.

Helical Bar issued a cheerful interim management statement this morning. This will cheer the market - and those who look for pointers to its always-cheerful chief executive Mike Slade.

 
The plight of the Euro is perhaps not something to cheer about. It may be fun to read everywhere today about how the Germans and French are trying to reign in the profligate Greeks. But a weakening Euro will start make UK real estate a little more expensive for those Continentals attracted to London by the weak pound.

Two other stories catch the eye. The first, in Building, is the news that a £3.8b US multi-disciplinary consultant called Aecom is keen to buy the world's second largest QS, Davis Langdon. Who next? Consultants like GVA Grimley are not that big a next step for Aecom.

The second tale is the pledge in the Telegraph today by Redrow to return to traditional-style houses. Returning owner Steve Morgan says many of those built in the last decade would be "more at home in Stalingrad." A view that will chime with the public - and may send a shiver down the spine of a large but not well known firm of architects called Aedas.

 
As today's Standard column reveals the architects last week submitted plans to Lewisham Council to build around 3000 new homes at Convoys Wharf in Deptford. Those with long memories will know this is the 40-acre site bought from Rupert Murdoch for £100m by Hutchinson Whampoa five years ago. Cheering to think work might one day start.

Today both the FT and the Telegraph cover the rejection by shareholders of a £2.98m pay-off for Grainger chief executive Rupert Dickinson, who stepped down from the UK's largest rented housing business last October due to ill-health. It is easy to see why the payoff was rejected.

At the AGM in Newcastle yesterday Chairman Robin Broadhurst defended the deal, suggesting that about half the money was to prevent Dickinson suing the company for the cash. But anyone who has met Dickinson in the last year will know his illness was the sole cause of his departure. (He is laid low every time he tries to work.)

The idea he would sue Grainger seems ridiculous: so, why the need to pay the extra £1.5m? Broadhurst played a straight bat and said he could not go into the details. But the funds who voted 53-47 against the deal were not convinced. This has been an unnecessarily damaging episode for a company perhaps caught in the backwash of the banker's bonus row.

British Land produced a decent if unsurprising set of third quarter results this morning. A decent underlying profit of £58m was earned in the last three months of 2009, along with an unsurprising uplift of 8.2% in the value of the portfolio, now worth £7.9b if you add in the joint ventures, including the £1.1b deal that saw half of Broadgate sold to Blackstone in Q3

The thing that sticks out is the £20m loss of rental income and the £16m gain from lower interest charges. This is presumably mostly due to the loss of rents from Broadgate and the lower level of debt brought about by that cheque from Blackstone. 

But what also sticks out by its absence is 7-8% valuation uplift on the half of £2.2b Broadgate Estate, now owned by the giant American Fund. That would have added roughly £70m to £80m to the £567m net uplift in the value of BL's property. It still feels like Blackstone have got the better half of this deal.

Chief executive Chris Grigg did announce the start of work to rebuild a couple of the Broadgate buildings plus an investment in "high quality opportunities" such as Surrey Quays. Mmm.... What he did not announce is a start on the Cheese-grater tower in the City. Perhaps his new management team led by the highly capable former AXA man, Steve Smith, can persuade this cautious banker to sex-up the full year results by going for the tower?

The FT reports seemingly good news this morning. UK Institutional funds committed £3.2b to property in the last quarter of 2009. This dwarfs the peak of £1.7b collected at the height of the 2006 boom, says the Association of Real Estate Funds. Just under £3b of this was raised by unlisted funds, says AREF - seven times the £400m raised in the third quarter of 2009.

Remember "committed," not spent. As Friday's story in the Standard on Knight Frank's optimistic forecasts hinted, so many IFA's are ticking the property box on their client's investment choices that many funds are in danger of being drowned in cash. A man close to the Pru suggested last week that one fund has more than £4m a day pouring into the coffers.

On Saturday EG carried a very good article showing that one third of the 34 opportunity funds set up since 2007 had not bought a single property. No wonder, everyone is a vulture these days - and the pickings are being fought over hard. This means the more conventional funds face a real dilemma.

A pause in capital value inflation suggests the 2009 Q4 gold rush is over. But the public do not yet know this. The IFA's are still handing over client's cash faster than it can be spent. Do the funds, a) spend it fast and risk a bubble; b) hold on to the money and hope, or c) tell the truth and close funds to investors? Perhaps an AREF survey on what has been spent rather than "committed." will help staunch the flow.

The script for the £62m purchase of Pinewood studios in 2000 by a group of investors fronted by Lord Grade was due to have reached a happy ending by now. Planning permission should have been granted to build 1400 homes camouflaged as film sets on100 spare acres of the studio's green belt land. But protestors living around the Buckinghamshire heathland spotted the manoeuvre. The alarm was raised.South Bucks Council refused permission last October.

Aim-listed company Pinewood Shepperton will no doubt appeal, as there is a great deal of money at stake. The value of the land and property had doubled by 2008 to £117m. The original price paid to Rank really only reflected the land value of the site as studios. Therefore a minimum of £100 000 in land cost for each of the 1400 units will be almost entirely profit. But let's be cautious and say that getting planning is worth £100m.

That's why not getting planning is starting to irritate one latecomer shareholder. Richard Bernstein of Crystal Amber built up to a 16.6% stake in Pinewood Shepperton last year. Bernstein is clearly an impatient man. He has told the Sunday Times that he wants a "showdown meeting" with Michael Grade because he believes the former ITV chairman is not pursuing an aggressive enough property policy.

Bernstein presumably thinks that breaking cover like this will change things. He is clearly not a man who has suffered quite enough under the English planning system: stakeholders who have include of John Whittaker of Peel Holdings, who owns nearly 30% of Pinewood Shepperton, and Aberdeen Asset Management.

They know better that to kick up a stink. Not just because it will irritate Michael Grade - it will also inflame the passions of Pinewood Green residents who are currently trying to get the land designated as a village green. The quick-win script is morphing into a saga that could easily be turned into a remake of a 1950's Boulting Brothers film. Bernstein needs to be patient. This is not the time for James Robertson Justice-style bluster.

The Howard de Walden estate will be taking a leap up the EG Rich list next year, according to the accounts for the 12 months to March 2009 released by Companies House this morning. The 90 acres of Marylebone owned by Baroness Howard and her family has for the first time been given an up-to-date market valuation.

The properties, which include most of Harley Street, have been valued at £1.45b as at March 2009. They will be worth a bit more than that now. So the EG Rich List figure of £1b will have to be adjusted upwards next year. The rock-like stability of London's great estates is shown by the fact that in the worst year since the war for the industry, the Howard de Walden saw its rental income increase by 11% from £55m to £59m. 

Profits in the year were however down - 42% from £44m to £25m.This does not seem to have affected the salary of the highest paid director, presumably chief executive Toby Shannon, who saw his salary rise from £640 000 to £704 000. 

On Wednesday Shannon was one of the panellists at an overcrowded conference held at the Royal Institution where the future of London's great estates was debated in front of more than 350 of the Cambridge property mafia. A great deal was made of the "custodial" role played by the Grosvenor, Cadogan and Portman Estates, as well as a lot of talk about "sustainability" and "taking the "long term view." Fair enough; but make no mistake, the great estates are, at heart, great money making machines for those lucky enough to hold a piece of the equity.

With the full year figures out from CBRE this afternoon, it is now possible to compare the 2009 results of the world's largest agent against its rival Jones Lang LaSalle, which reported on Tuesday. One thing is clear from both sets of numbers: both firms have squeaked through one of the worst years in property history, CBRE with a tiny profit, of $64m, JLL with an even tinier loss of $4m.

But how do the rivals compare?  Revenues first.  JLL comes out best, with global revenues down just 5% from $2.7b to $2.5b. CBRE global revenues slumped 20%, from $5.1b to $4.1b. Running costs at CBRE fell by 17% from $4.7b to $3.9b. At JLL costs were reduced by 8% from $2.5b to $2.3b. In other words both firms managed to just stay ahead of falling revenues.

How about the UK and Europe? CBRE revenues fell 25%, from $1.1b to $818m. On that number an operating loss of $50m in 2008 was turned into an operating profit of $57m in 2009. Well done EMEA chairman Mike Strong. JLL has not fared as well. Revenues fell by the same percentage, from $871m to $646m. But an operating profit in 2008 of $23m has turned into a loss of $10m. Is JLL feeling the loss to Asia of former EMEA chief Alistair Hughes?

But JLL can feel happy they do not have the debts incurred by CBRE, who must rue the day they bought property manager Trammel Crow for $2.2b in late 2006. CBRE still owe the banks $1.7b and has taken a $1.1b write down. By contrast JLL has almost no debt. That difference aside, both firms look set to consolidate their position at the top of the agency tree in 2010.

Finally, what about their prospects for next year? The best judge of that is the US stock market. JLL's shares more than doubled, from $27 to $61 over the past year. CBRE are only up 50%, from just under $10 to £13, no doubt tethered down by that debt.

My goodness, these accountants are getting everywhere. Ernst & Young will today pour a bucket of cold water over commercial property growth prospects in a report produced by the their moderately influential ITEM club. How long will it be now before Deloitte start pinching research produced by their new acquisition, Drivers Jonas?

Anyway, back to the ITEM report. The unsurprising conclusion reached, is that it would be a bad idea to count on the continuing levels of growth in values exhibited by the 3% increase of the IPD index in December. Indeed. Only a fool would extrapolate the December increase into 46% jump by the end of the year.

E&Y comes up with the usual reasons the market will stall. The jump in values over the past six months is driven by sentiment - and not the fundamentals of suppy and demand. Around £160b of commercial loans will need refinancing over the next four years. Quantitive Easing will end next month and with it the flow of cheap capital.

In other words the report says nothing new. The ITEM club influence may slightly dampen the animal spirits of the more bare-toothed investors currently stalking bargains in the £160b distressed loans jungle. But the accountants singularly fail to put numbers on their gloomy forecast, declining to say just where they think the IPD index will lie next December.

Perhaps this is something Drivers Jonas Deliotte would care to work on? A report that dares to forecast the weather rather than tell the world it's raining today would make a much more useful contribution - and certainly be a jump up from the DJ Crane Survey.

A month in New Zealand produces two bits of property news of some interest: the first is a largely unreported (outside New Zealand) house-building disaster of epic proportions; the second, just one more property lending disaster from the good old Bank of Scotland, lead lender on a $1b (about £450m) project to build four five star hotels in Queenstown, a lakeside resort which sits in Lord of the Rings country in the South Island.

Quite why BOS thought it advisable to organise a $514m ( £225m) construction loan on a steep, isolated and tricky-looking lakeside site in a town no bigger than the Cumbrian town of Kendall is not known. But last May the bank called in the receivers on the Kawarau Falls Station site. The bank is now nursing a loss on two rather prosaic-looking hotels, on which work limps along. The rest of the development is stalled.

But the real biggie in the land of the long white cloud is the $11.3b ( £5b) cost of weatherproofing up to 89 000 leaky homes built to appalling standards between the early nineties when building regulations were relaxed and 2002 when thousands of the ticky-tacky boxes began to leak. 

A switch to performance-related design standards and the abandonment of timber treatment led to the construction of homes with 150mm external walls consisting of 100mm by 50mm raw pine timbers covered with 15mm plasterboard on the inside and 35mm foam or plasterboard external cladding simply sprayed or faced with a waterproof membrane.
Needless to say the joints leaked, the timber rotted, the homeowners began to complain. 

Today the leaky-homes scandal has lead to widespread bankruptcies among developers and professionals hit by a whole legal sub industry of litigation that has the government in denial, local councils taking the rap for employing privatised (and now out of business) building inspectors and cladding suppliers running for cover.

A report from PriceWaterhouseCoopers published by the NZ government just before Christmas gives a handy guide to a saga that gives a terrible glimpse of what might happen in the UK under similar circumstances. Those thinking of industrialising the construction of UK homes to meet new energy standards might find it worth a read.