Fri 19 Sep 2008
The day before yesterday
Recently, listening to some property people crying into their spritzers over the state of the market, the nation, their future and their pay packets, I was suddenly transported back to 1987. To the early morning of 20th October 1987 to be precise, the day after the infamous global stock market crash that quickly became known as Black Monday.As a hard-working, up-and-coming agency PR man, I had booked Fortnum & Mason to supply a chef, a butler and a lavish press breakfast to a Barratt penthouse in Wapping. Barratt, as so often before and since, was pioneering regeneration – this time in London Docklands, and in this instance by converting derelict Georgian spice warehouses on the Thames waterfront into luxury homes. The apartment I was showcasing was newly-built onto the roof of the fabulous Gun Wharves complex, and at 3,000 sq ft and £500,000 was one of the biggest and most expensive pads in Docklands. Sounds small beer now, but it was really something 20-odd years ago.
The press guests were Chris Warman of The Times and the late John Brennan of the FT, and our host was the fabled Richard Reynolds, then managing director of Barratt East London and the hardest nut in housebuilding. That day, Richard (who has since retired to a life of non-executive worthiness) could afford to be the picture of avuncular charm: Gun Wharves, like everywhere in Docklands, had been selling like hot cakes to the City traders, barrow-boys, camp followers and speculators who fancied they saw gold on the still-grimy East End streets. Indeed, the very penthouse we were in had been reserved the day before by some bleary-eyed bloke in a suit who wandered in, had a five-minute look around and wrote a cheque before nipping back to rack up another mint in front of the flickering screens.
It really was like that. While big guns like Barratt enjoyed their share of this over-heated madness, they wisely devoted most of their energies to developing the partnership business in which they remain unrivalled players, working on large-scale schemes in harness with the old London Docklands Development Corporation and, especially shrewdly, setting an early benchmark for private sector provision of public sector housing. Elsewhere, though, scores of smaller builders and developers – and not a few chancers – piled in to give parts of the E1 and E14 postcodes a flavour of The Yukon. It was here – seriously – that one long-lost developer threw up a few flats and offered each for sale with a free Porsche. And they were rapidly snapped up by young men wearing red braces and hair gel.
The fact that four of us munched our way through half a pound of caviar with our scrambled eggs, smoked salmon and champagne that day is indicative of the times. Or, should I say, was indicative of the times. We knew the markets had had a bit of a rough ride the day before, but it was only dear old John Brennan, waving away a second helping of brioche proffered by the butler, who smelt the smoke coming under the door. “I suppose you realise it’s all over?” he said. “I don’t think you’ll be needing to clean the showflat carpets for a while….”
A few weeks later, as I trudged through horizontal sleet blowing off the river to meet another journalist, that distant breakfast seemed a smug, profligate, Nero-like event. John Brennan the soothsayer had indeed soothly-said. The market was dead. Richard Reynolds was quoted in a Times headline – “The mad days are over” – as we tried to reassure London that the removal of heat was actually the precursor of a return to a “normal” market, but to be honest none of us were sure about anything. We seemed to have gone through a modern version of the Wall Street crash of 1929, but the late-20th century implications of that were a mystery.
The icy wind blew out of Wapping High Street and right through the industry. Jobs were cut, costs ruthlessly pruned and businesses were closed. Margins crashed and we all had to work like dogs for any sales that remained to be had. Things would never be the same, would never recover. How could we get back from this? We were all going to hell in a handcart.
But hang on – doesn’t all this sound familiar?
It does, because we’re there again, feeling the pain. But what happened after ’87? First, we slithered into an even deeper slump which culminated in another ‘black’ day (Black Wednesday, 16th September 1992, when we pulled out of the ERM), after which things started to improve. Rapidly. Demand was high, money got cheaper, prices rose and once again, everybody realised that property is still the best investment you’ll ever find, anywhere. That’s the lesson of history. It’s a lesson we need to heed as we fight our way forward from here.
Posted by Bob Barlow
in Barratt Homes, Chris Warman, John Brennan, Richard Reynolds, The Bob Barlow Column on Fri 19 Sep 2008
Second best media moment of the week for me - which is pretty good! (Paxman screaming at the Halifax advert on Wednesday's Newsnight has to take the prize though).
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