Buy Real Estate – Death of The Office Greatly Exaggerated!

Are you reading this from home? Ensconced in your favourite armchair, still wearing pyjamas, and yet on full pay and feeling like you are working? What could be better?

It is easy to see why journalists with column inches to fill are making mileage about the joys of working from home as a new phenomenon. But they need to lift their noses from their screens and think beyond their own profession. Writing things is one of the most solitary occupations out there. Journalistic contacts need to be built, nurtured and developed but, crucially, it is external relationships that matter. A writer is judged on their output; it is clear, and in black and white (literally).

However, most organisations thrive on the informal networks which grow from shared space, shared experiences and camaraderie. It is those water-cooler chats which build company morale. Taking the opportunity to lobby the big boss with your breakthrough idea can make or break a career. This will not happen at home.

Similarly, many many people are enjoying the absence of a long commute, and seeing more of their spouse and children instead. In time, this will pale. Most relationships benefit from some separation. Being holed up en-famille is not one long holiday.

Then there are the meet ups in coffee shops which drive the financial world, the quick beers after work which support networks and friendships. Quietly, and probably not in front of their other-half, many people yearn for the space and freedom brought by escape to the office.

But Coronavirus?

Many observers speculate that it will be many many months before a credible vaccine can be produced against Covid-19. After all, would you take a rushed-through vaccine with unknown side-effects or long-term implications, against an infection which most of us have had and is unlikely to be fatal anyway? On the bright side, humans are innovative. If necessity is the mother of invention, then surely making money is the father. Ways will be devised to allow work to happen.

We can see that large open-plan offices may have some consumer resistance, and lift operations need to be thought through. But these issues are not show-stoppers. Partitions are easy. Air-conditioning can be reconfigured to only bring in fresh air, warmed in a heat exchanger.

We do not fully understand the transmission of Covid-19. Latest research shows that it is less air-borne droplets and more likely direct touch. So we’ll stop shaking hands, and maybe we will wear masks in the lift to give comfort to others. We will not stop congregating, and we will not stop wanting to work together.

The office is not dead. By this time next year, our modes of work and way of life will be very close to previous style. Note that this applies to offices. It is curtains for shops. They’ve had it

This opens up opportunities to buy property companies at a large discount. Try to choose one with large office investments such as Helical and British Land.

Steer clear of shopping centre owners such as Intu and Hammerson. Oh, and watch out for the local authorities who invested in commercial real estate on borrowed money going bust. There could be drops in valuations over the next 6 months, for both offices and retail. It won’t take long for their investments to fall into negative equity. I’m thinking of you Spellthorne – see our earlier article here, and our even earlier article here. But there are many others.

This is not a pivotal moment in time, despite what the media would have you think. The world will very quickly revert to past patterns, with only a few masks and gloves to remind us of the great coronavirus scare of 2020.

Buy Helical at 307 and British Land at 355.

IMPORTANT: Please see our disclaimer. We are only commentators. Readers must review any potential share purchases or sales ideas with their special advisors before going ahead.

Scottish Architecture: V&A Dundee is Good, Scottish Parliament is Bad and Ugly

What a wonderful, uplifting building has been built by the V&A in Dundee!

V&A Dundee – uplifting on a grey day

It is modern, but references the past life of its location on the River Tay and in the lovely city of Dundee. What is most impressive is how it is so accessible – and I don’t just mean the ramp to the door and lift inside. Everyone can see it and understand what it represents: truly a case of bringing art to the masses in an inspiring and interesting way!

Dundee has a long history of shipbuilding, especially (whisper it) for the whaling industry. Hence it was Dundee that supplied super-strong ships for Antarctic explorers. This building is the cornerstone (!) of reinvigorating the riverside area. It is a welcoming sight as one leaves the train station. Oh, and if visiting Dundee from the south, do try to arrive by train. The journeys across the Forth bridge and Tay bridge are worth the rail fare in themselves.

Magnificent Forth Bridge

Impressive Tay Bridge

The building was designed by Kengo Kuma. For us, even more impressive is the structural engineering of the building. With few internal walls to tie it together, the design of a bowl-shaped building must have been rather interesting! So kudos to Ove Arup for their work there.


Contrast to Scottish Parliament

Scottish Parliament – Bad and Ugly

Regular readers will know of our disdain for the Scottish Parliament building – and yet it is feted among the architectural and planning community. We can see that it is innovative, and that the layout of the buildings references traditional Scottish democracy. Yet here is the BUT… and it is a big but (the worst sort eh).


  1. A weird concrete monstrosity is wildly out of place on the Royal Mile.

  2. The references it makes can only be understood from the air.

  3. It is elitist. It works for people “in the know”, who claim aesthetic training and superior artistic feel. Everyone else just feels excluded.

To us, the Scottish Parliament emphasises the gap between architects, planners, and all of the people for whom they are meant to be working. It has brought the professions into disrepute.

What a contrast to the V&A Dundee. This building is in context, striking but easy to understand. It is uplifting for everyone who sees it. What an inspiration!

Pic from Ove Arup

Boris to Win 43 Seat Majority Says Meta-Poll

You’ve heard of meta-analyses, where academics who can’t be bothered to do their own research just nick everyone else’s hard work, crunch the numbers a bit, and come out with a super-accurate result? Well here is our META-POLL. After much reading of the papers, surfing the net, and even talking to people, we have concluded that the Tory party will win. (Bet you saw that coming eh?)

Why do we think that?

  1. Farage folded, as predicted here recently, avoided splitting the leave vote, and crowned the Tories as winners

  2. The Labour manifesto was written to appeal to hard-line left wingers – who would have voted for Jeremy anyway. Only the naïve or those too young to remember the 1970s could think that nationalisation is the answer. (See our earlier report on rail user numbers pre- and post – nationalisation). The “free” broadband idea went down well, but the practicalities are horrible. By the time it is built, at five times the original cost, technology will have made it obsolete. And the big beneficiaries will be the farmers and isolated rural communities – who will not be voting Labour under any circumstances. Meanwhile, their fence-sitting on Brexit feels a bit like “Follow Me….. I don’t know where we are going, but Follow Me!”

  3. The Liberal Democrats have shown themselves to be neither liberal nor democratic. Their reverse Article 50 campaign can only appeal to the most die-hard europhiles. Meanwhile, Jo Swinson has not done well. Her claims to be PM in waiting invite the retort that she’ll be waiting a very long time.

  4. The Tories have avoided a May-style manifesto-suicide-note. Divisive figures such as Rees-Mogg have been kept out of the limelight. Boris himself has picked his battles carefully, with more to lose than win.

So what happens now?

There are still considerable risks for Mr Johnson. Will the left-leaning students be too busy recovering from their end-of-term parties to vote?

Students preparing to oversleep and miss voting

Just how many people were too embarrassed to tell pollsters that they would vote Tory (but will anyway)? Will tactical voting have any impact? Will Mr Trump try to intervene? He is not great at keeping his thoughts to himself is he? That could hurt Boris. In this last week, we expect the Tories to try to refocus on Brexit as the major issue – and Labour to try to talk about virtually anything else!

What does it all mean for Asset Prices?

The market had a lost year in 2019, with too much uncertainty. A Tory win is about 70% baked into the market, so we expect a moderate bounce on 13 December. This will be most pronounced for the likes of BT and other nationalisation victims. Despite longer term trading arrangements still being in the air, we feel that 2020 will turn into a log bull run for equities and commercial property, as investors get back to the serious business of making money.

Scottish Parliament is Rubbish

For once we don’t mean the politicians in Scotland – though as an aside, why is Scottish Nationalism tied up with left-wing policies, when nationalists in other countries are more to the extreme right: eg National Front in France, or EDL in England?

However, this time we are reviewing the building completed in 2004 to house the  Scottish Parliament.

The Parliamentary buildings were ten times over budget. Not ten percent, but a multiple of ten! That is the outcome of public management of projects, spending Government money. To all those thinking that Mr Corbyn has it right in letting the Government run anything to do with construction or businesses, there can be no finer example of why it is such a bad idea.

The build budget was £30mio – £40mio. The final outcome £414million. That is just a mind-boggling variance. Could part of the reason behind the vast overspend be that the builders were Scottish, but they knew it would be the English tax-payers picking up the bill? There may be one or two people in Scotland to whom that would appeal.

Ugly Frontage to the Royal Mile

And so to the design. This must be one of the best locations in Edinburgh, on the Royal Mile, opposite Holyroodhouse Palace, and backing on to the rugged mountainous Arthur’s Seat. Like most architectural observers, we do not advocate a pastiche of earlier designs. A modern design is more honest. But we do believe in respecting materials and blocking forms.

Google Earth of Scottish Parliament

The exhibition inside explained that the buildings in the complex were designed to represent the human body, or groups of people standing around in a form of government discussion. Who bought into these ideas? Even seen from a helicopter (okay, let’s be truthful, even seen from Google Earth), it is hard to make any simile from the mish-mash of weird shapes. Observed from the Royal Mile, the concrete wall with convex and concave horizontal curves – pictured above -just looks a mess, and totally out of place. What an eyesore on the most important street in Scotland. Instead of render or attractive stone, we see bare concrete, enlivened by rusty steel poles.

Unnecessarily complex and expensive details

The Scottish Parliament Building could have been attractive, eye-catching and uplifting. Instead it is jarring and rude. Shame.

Whaley Bridge Dam Lies, Statistics and Climate Change

The drama in Whaley Bridge over the weakened Toddbrook Reservoir Dam has captivated news audiences. One struggles to imagine how stressful it must be for owners and occupiers forced to leave their homes without notice.

Toddbrook Reservoir

However, this crisis is NOT the result of Global Warming/Climate Change/Extinction Rebellion or whatever it is called this week.

The High Peak area of Derbyshire had some quite heavy rain showers last week. But thunderstorms are no more proof of Climate Change than they are of the existence of fairies. The dam was not overwhelmed by a biblical downpour.

As an aside, if by biblical rainfall, are we talking about total flooding which requires an ark to be built? One can only think that comparing a bit of a summer cloudburst to the flooding of all the land in the world as perhaps over-exaggerating.

Anyway, back to the dam. What happened was that there was heavy rain, and the water rose enough to flood over the spillway, as it was intended to do according to the 1831 construction, and has done so many times before.

What was different was that the sealing of the concrete slabs on the spillway failed, allowing the water to run underneath the hard surface, and wash away material that formed part of the structure of the dam.


The weakening of the dam was nothing to do with climate change, it was simply the result of bad maintenance of the spillway. One has to wonder why the BBC was so convinced in its news programmes that this POTENTIAL CATASTROPHE could be attributed to Climate Change?

Not once was it suggested that it is the Canal and River Trust – owners of the reservoir – who are responsible for lack of maintenance.

Unfortunately, by falsely linking every weather-related event to Climate Change, the BBC has become labelled as creating another Project Fear, this time about Climate Change. To us, it is impossible to access clear and unambiguous data about Climate Change. Also, there is so much variance in the weather that it takes decades to accurately assess changes to the average. However, we take the view that it would be prudent to address some of the worst potential triggers in human activity. But it would be wrong to reduce western civilisation to penury, just to fight what might still be a collective hysteria.

As we have written before, we are not fans of the BBC, and this event illustrates how they continue to twist their news reporting with political interpretation.


  1. The Whaley Bridge Dam Drama is not about Climate Change

  2. The damage to the reservoir was caused by bad maintenance by the Canal and River Trust

  3. The BBC and other media have let Climate Change hysteria politics affect their reporting


PS. Nice politics by Boris, visiting and looking concerned!

Spelthorne Property Splurge Makes The Sunday Times

Way back on 29 January, we commented in Council Splurge on Commercial Property Will End in Tears” that some local authorities were trying to make up for cuts in their funding from Central Government by buying commercial property all over the country. Last weekend, (6 months later!) the Sunday Times ran the same story, titling it “Tiny town hall is £1bn property tycoon”.

The attractions are easy to understand…… the Government seems happy to lend huge sums of money to local authorities at tiny rates of interest and with apparently few questions asked. I wish they’d do the same for me!!

Central funding of local councils can be around 80% of their overall income – and so when this was cut after the Great Financial Recession, it must have hurt badly. So we admire the entrepreneurial spirit of councils like Spelthorne, who have borrowed cheap money and put it to work. Their efforts have been so successful that, according to the ST, Spelthorne now enjoys more income from property than from council tax.

But the risks remain. Commercial property values can be hugely volatile. What happens if there is a huge fall in values – say 50% – and suddenly Spelthorne loses £500 million? That is rather a large amount of money! It will only be a paper loss – until they sell – but it will still show in their accounts. Only a fool puts all of their investment cash into one kind of asset.

And one has to ask the question;- Why have they been investing in office blocks and shopping centres all over the country, when some of the investment funds could have gone into local housing, which would have created income and opportunities for people in the borough to access rental homes? A sensible investment approach would have allocated investment to other, non-correlated assets too – say shares, loans to local businesses, corporate bonds and so on. No investment is foolproof, but at least a spread of assets means they are less likely to collapse in value all at the same time! They could have at least invested in offices and shops within their area to gain a return and develop the local economy.

We will watch this space with interest over the next few months. Rather scarily, it is much easier to see commercial property losing 50% of value than it is to see it gaining 50%. And that is going to hurt Spelthorne and similarly daring councils.

Government Ministers Killed the Small Builder – Then Blamed Large Builders for the Lack of Houses!

Individual Quality New-Build

Last week, we promised you an installment about the slow rate of house building.  I hope the tension of waiting hasn’t been too tough for you all?

Every week (or so it seems) the large housebuilders are accused of operating a cartel to restrict the building of new houses – and thereby hold up prices of their land banks. This is incorrect for a number of reasons;-

  1. There are about 25 million houses in this country – and the build rate is less than 250,000 per year. Therefore, with new build less than 1% of stock, prices are set by turn over of the existing stock, not by the tiny amount of new build. In reality, it works the other way around – the value of land is the residual, the result from the sale price of a house less the build cost (and some profit).

  2. House-builders are in the business of adding value to land by building houses – the more houses they can build, the more money they turn over and the more profit they make. Why leave money tied up in land when it can be turned over and a profit made?

  3. The housebuilders are accused of sitting on plots with planning permission – again, to drive up prices. This is not true, and displays a fundamental misunderstanding of the market. A housebuilder needs a pipeline of sites ahead to keep production going and to usefully employ their many personnel.

  4. There is also a matter of commerciality here. If ABC Building plc has a site with permission for 5000 houses on the edge of a small city, it would be crazy for them to build all 5000 in one go: the market for new-build houses in a small city cannot absorb so many new houses in one location, there just won’t be enough potential buyers. So the builder has a programme to build 500 houses per year. This has the dual benefit of feeding houses into the market to meet demand levels – and also avoiding the inevitable bankruptcy that would come from building 5000 houses in one go and having 4500 of them sitting empty! Both of these factors are pretty important for building companies.

  5. Where the large builders are red-handed is in the support of ever-tighter regulations and controls on the building industry, knowing that they can cope but their smaller competitors do not have the specialist teams required.

Commentators sometimes whinge about the ever-reducing number of small and medium size builders competing with the big-boys. This is the Government’s fault, not due to a lack of entrepreneurial spirit in the construction industry.

For a small builder, with limited capital, every month/year of planning delay is a month/year when that investment in land is not earning any return – but you know what, the bank still wants its interest! Every “good-idea” foisted on the planning application adds cost and delay. This is the typical list of work that has to be commissioned, received and paid for before a planning application can be submitted;-

A full set of drawings (fair enough)

Design and Access statement

Site survey

Air Quality Assessment

Archaeological Assessment

Biodiversity Survey and report

Crime Impact Statement

Flood Risk Assessment

Heads of Terms – Section 106 Agreement

Housing Statement

Heritage Impact and Justification Statement

Land Contamination Assessment

Landscaping Details

Landscape and Visual Impact Statement

Lighting Assessment

Noise Assessment

Odour Assessment

Photographs and Photomontages

Playing Field Statement

Statement of Community Involvement

Structural Survey

Supporting Planning Statement

Sustainability Appraisal and Energy Statement

Town Centre Uses

Transport Assessment and Statement

Travel Plan

Tree Survey / Arboricultural Implications

Utility Assessment


Phew! And that is just planning. Next, the builder has to negotiate Section 106 agreements with the planners, CIL’s, Section 104 agreements with the Water Authority, and Section 38 agreements with the Highways Department. Then, after he has taken all these costs into account, he has to provide 30% affordable housing (at a reduced sale price). All this can be allowed for in the purchase price of the land. But what if the Council then throws a wobbly and declares a Selective Licencing area, where any buyers thinking of letting their property has to pay the council £900 for extra regulation. Suddenly the sale price is less.

Oh, then we come to the Health and Safety Executive. Over time, the small builder will learn that if there is an accident on site, he is likely to go to jail. Of course nobody wants to see people hurt or killed on a building site, but the reality is of moving heavy loads about at high levels with an ever-changing crew of people. No matter how experienced the workers are, if they do something stupid, it is the builder who goes to prison.

All of the above measures were put in by well-meaning ministers, very few of whom had ever worked in construction, nor any other kind of physical job. Each time the job was made more difficult for the small builder, more of them left the business or never started.

The outcome is an industry dominated by a few large firms. It is the inevitable outcome of decades of ever more complicated planning requirements, government interference and Health and Safety zealots.

This situation will not change until a Housing Minister with common sense is appointed. Unfortunately, the phases ‘housing minister’ and common sense’ rarely seem to go together. Thus, we are doomed to a shortage of housing and ever-climbing prices.  Make no mistake, the death of the small builder is entirely the fault of Government Ministers.

Housing Shortage is the Public’s Fault (With Some Government Help)

The chattering classes like to moan about “the housing shortage” – almost as soon as they have finished boasting about how their house is worth a fortune and is rising in value faster than their salary. Don’t they see the hypocrisy (and boring-ness) of these two conversations? The public speaks with forked tongue!

New Builds on a David Wilson site

As we reviewed before, (in our article “Why the Green Belt is Bad for the Environment”) the Government awarded itself control of all land usage in the 1947 Town and Country Planning Act – and the many acts of meddling since. And the basic tenet has always been to restrict building. It doesn’t take an economic genius to calculate that if the supply of something is restricted, but demand grows…… what happens??? Prices of the scarce good rise.

And yet the public supports planning control, especially the Green Belts around major conurbations. They don’t want lots of house-building, they like high prices for the houses they own – but they would quite like cheaper houses for their adult children.

George Osborne – more of a politician than an economist

George Osborne tried to square this circle with Help To Buy – keep house prices high, but help youngsters to get on the ladder by giving them a subsidy. Nice politics Georgie, but terrible economics. If something is in short supply (due to Government control), then ramping up demand (by increasing the purchasing power of buyers) can only have the effect of pushing prices even higher!

Every so often, the Government likes to point the finger at somebody else – perhaps it is the big-builders operating a monopoly (it isn’t), or it could be small builders pulling out of the market (it is, but that is the Government’s fault).

And, deep breath, one cause of higher house-prices is immigration. We are in favour of immigration – it improves the economy, culture and social life of the country – but there is no denying that it creates extra demand for restricted housing. We should have an honest conversation that increasing the population living in the UK will necessitate more houses. If you have got this far into our article without understanding how extra demand increases prices, then I am afraid we have failed you! Oddly, in these days when even to raise the topic of immigration raises the risk of being accused of racism, this contribution to house-price inflation and shortage is rarely discussed? Easier to blame those nasty housebuilders (which is actually pretty disgraceful, especially for a Conservative Government).

We will come back to the topics of builders land-banking and the rapidly disappearing small builder in a future article very soon….. watch this space.


The housing shortage is the Government’s fault – but, to be fair (just for a change) – the politicians are only reflecting the public’s mixed messages on this subject.

OEICs and Unit Trusts are the Next Financial Mis-selling Scandal

We have Neil Woodford to thank for highlighting the dangers of Open-Ended Investment Companies (OEICs). Though it is only three years since the small ripple in property prices last illuminated the topic.

Offering daily liquidity to retail investors when the underlying assets can take months to sell can obviously end badly. If a fund invests £50mio in a huge office complex, but suddenly all the notoriously-flighty retail investors want out – such as after the surprise Brexit referendum result – the office can’t be sold within 24 hours to return the money. It’s not a hard concept to grasp is it???

But there is an alternative – Investment Trusts. In fact, there is a whole subset called REITs (Real Estate Investment Trusts) which have tax advantages too.

What is the Difference?

Investment Trusts are companies in their own right, whose shares can be traded without the underlying assets being bought or sold. So if there is a marked rush to sell, the price will go down, but a sale can still take place. OEIC are a fund that buys assets, so if money is withdrawn on a net basis, assets have to be sold before the cash can be returned to its owners.

So Why Would Anyone Buy a OEIC?

Ahhh, now that is the nub of the scandal. OEICs (and Unit Trusts) pay kickbacks to IFAs of up to 5% of money introduced. Whereas advisers get nothing if they encourage clients to buy investment trust shares – even though investment trusts are almost certainly a better investment. For a start, with investment trusts, 100% of the money goes into the asset, not as little as 95%, but also there is that crucial liquidity, the ability to pull money out under pretty much all circumstances. With investment trusts, there is the possibility of the share price being at a discount or premium to the Net Asset Value – which can work in favour or against the shareholder depending on which one it is and whether the shareholder wants to buy or sell at that time. Buying at a discount is good, selling at a premium is good too! But not vice versa, obviously……

I was amazed to learn yesterday that Hargreaves Lansdown received £41m over the last 5 years for bringing money to Neil Woodfords’ Equity Income Fund…… £41 million pounds in introduction fees! This money originated as investor’s money, paid to Hargreaves Lansdown instead of ending up in the fund. The same investors now find themselves locked into the fund until such time as Mr Woodford has sold enough assets to pay them out. One can’t help but feel that in nearly all cases, the investors were given a bum deal.

Was the FCA asleep at the switch?

After the debacle of gated funds (where withdrawals are banned) in 2016, why hasn’t the FCA (Financial Conduct Authority) stopped the sale of OEICs? The introduction payments are immoral, and especially for the funds with illiquid assets, OEICs are just the wrong vehicle for retail investors.

It appears that the only reason such OEICs and Unit Trusts exist is because the kickbacks to advisors are so lucrative.


PS. Apologies for using the “asleep at the switch” phrase. I think it refers to American railway signalmen not paying attention!

“Boris Island” Cannot Replace Heathrow Third Runway

But Upper Heyford Could!

New Airport Capacity is desperately needed

Boris is famed for promising that he would lie down in front of the bulldozers if the third runway at Heathrow is ever built. Whilst some might hope this was a literal promise rather than figurative, his likely elevation to PM suddenly makes his attitude quite important.

Location and new motorways for Boris Island

When he was Mayor of London, Mr Johnson proposed a new international airport on a man-made island in the Thames estuary, east of London. It was dubbed “Boris Island”, though presumably not by BoJo himself. The location is wrong, but let’s examine the concept………..


Our Requirements for a New Major Airport

  1. Lots and lots and lots of space for multiple runways. With sufficient room, a new South of England airport could concentrate all our international flights with much better efficiency.

  2. Sparsely populated surroundings to reduce suffering from air-pollution, noise-pollution and restricted operating hours

  3. A huge number of people within 90 minutes travel time

  4. Plenty of workers within 30 minutes commuting distance

  5. Great transport links.

Heathrow fails as it is too hemmed in for sufficient expansion. Boris Island fails because the Thames estuary is too remote for most of England – and it still requires flights over central London.

We are indebted to our correspondent David for the excellent suggestion that the new airport should be designed alongside HS2 (literally alongside, as in right next to it – and hey, let’s put in a station too!) Locate it at the disused RAF/USAF base at Upper Heyford in Oxfordshire, and suddenly the UK would have a world-class airport offering flights to every corner of the globe and untrammeled travel benefits. The site is right next to M40, and HS2 could ensure that travel from Central London or Central Birmingham would be only 30 minutes.

Google Earth showing Upper Heyford, M40 and Bicester

Nearby towns of Bicester, Banbury and Oxford could supply the workers. The whole of Southern England would be served, and once HS2 is complete, cities such as Manchester, Leeds and Nottingham would be less than an hour away. Thus internal flights are reduced and the demand for obscure destinations would be concentrated at one hub for all of northern Europe.

Although we have had our doubts about the economic benefits of HS2 (see article here), throw in an extra £20bln for a replacement airport and suddenly it all makes sense.

Time for joined up thinking from the new Government. Come on Mr Johnson, it is time for…….. dern… dern…. derrrrr…….

The British Aerodrome!