Outlook: High cost of Canary Wharf's success

WHAT WITH all the cranes, building work, the chattering of foreign tongues and the general air of conspicuous prosperity and consumption, it feels quite like the 1980s again down here at Canary Wharf. Certainly you wouldn't believe this was part of near recessionary Britain. The complex now even boasts its very own financial scandal - based around a group of high earning, high living CSFB traders allegedly calling themselves the Flaming Ferraris.

From where we sit, the level of activity is truly astonishing. Looking out from the Independent's City office in the South Eastern corner of the existing Canary Wharf tower, to our immediate left rises the near complete Citigroup office complex. Immediately to the East of that, work has already begun on the Salomon Smith Barney tower, which will eventually be linked to the Citigroup building via a connecting trading floor.

To its left, the foundations are being laid in the remains of a disused dock for Britain's largest ever non governmental office block - the HSBC tower. Looking out towards the City, the high rise cranes litter the horizon. There are luxury hotels, apartments, more offices and more complexes going up right left and centre. If ever there were a right time to tap the markets for extra money, this would seem to be it. Canary Wharf, in receivership less than seven years ago, is a success at last.

Unfortunately, this fairy tale comeback for Paul Reichmann and his fellow travellers, cannot be said to demand unquestioning admiration. The cost of success, to the taxpayer and other regions that might have benefited from such development, is a high one. To make it work, Canary Wharf has required the most expensive piece of road ever built - the Limehouse link.

On top of that comes the Jubilee line extension, a stretch of tunnelling of both unprecedented cost, and outside servicing the wharf, of highly dubious general worth. Without these two pieces of infrastructure, Canary Wharf would still be a millstone round its bankers necks. Massive tax breaks, from which construction of the HSBC tower will continue to benefit, has further subsidised the planned stock market flotation.

Still, it would be churlish to be unduly cynical. We are going to have to await publication of the prospectus to make any kind of investment judgement on this company, but on the face of it, the complex should be capable of attracting quite a following. Today's capital structure is completely different from the one that sunk the venture in the early 1990s. Most banking debt has been securitised against rents, and what remains will be covered by the proceeds of the share sale.

Future developments will be financed on a highly conservative basis, with the company promising to keep speculative development (where properties are built without tenants to occupy them) to a minimum. The chances of the company going bust again would therefore seem remote. Its longer term prospects are another matter. With rents for new tenants beginning to approach those of the City, the complex may need to demonstrate attractions other than just the promise of acres of cheap, modern office space to persuade financial institutions to keep moving east.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
Keith Fraser says we should give Isis sympathises free flights to join Isis (AFP)
news
Life and Style
A picture taken on February 11, 2014 at people walking at sunrise on the Trocadero Esplanade, also known as the Parvis des droits de l'homme (Parvis of Human Rights), in front of the Eiffel Tower in Paris.
techGoogle celebrates Paris's iconic landmark, which opened to the public 126 years ago today
News
Cleopatra the tortoise suffers from a painful disease that causes her shell to disintegrate; her new prosthetic one has been custom-made for her using 3D printing technology
newsCleopatra had been suffering from 'pyramiding'
News
people
Arts and Entertainment
Coachella and Lollapalooza festivals have both listed the selfie stick devices as “prohibited items”
music
Sport
Nigel Owens was targeted on Twitter because of his sexuality during the Six Nations finale between England and France earlier this month
rugbyReferee Nigel Owens on coming out, and homophobic Twitter abuse
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Client Services Assistant

£18000 - £20000 per annum: Recruitment Genius: A Client Services Assistant is ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor