Canary Wharf is a huge and brave investment that has gone wrong. There is a point in all bad investments where the investor has to make the tough decision to cut losses and pull out. In this case, the Reichmann brothers were the investors and the final decision has been taken away from them. The administrators, Ernst & Young, are obliged to soldier on with efforts to find an investor to replace them.
So far they have failed, and for very good reasons. Canary Wharf is simply not worth buying. To finish the development would require millions more pounds, with the likelihood that no one would then want to use the place. Sooner or later, the administrators will have to admit that the task of selling it is impossible. But not finding an investor really does not matter.
Consider first: the billions spent on Canary Wharf to date was money from Olympia & York, a Canadian property developer. A few British banks were involved, but most of the money came from overseas. It is not, therefore, primarily a British financial loss.
Second: if anyone buys Canary Wharf, the Government will be obliged to give away up to pounds 1bn in tax relief because of the Docklands status as an enterprise zone. Were Canary Wharf to be left to rot, however, there would be no giveaway.
Third: with no buyer, the Government can reasonably drop the plans to build the Jubilee Line underground extension. It would thereby save at least pounds 1.5bn that it would have spent on the project.
Fourth: with no Canary Wharf on the market, other property values should stabilise, and perhaps start rising. This would help to mitigate one of the worst effects of this recession and restore some confidence to the economy.
There are, of course, the social effects of abandoning the attempt to revive this part of the eastern area of London, but they are often exaggerated. The Isle of Dogs has become a somewhat isolated enclave. It consists mostly of offices, and the residential areas have never really taken off. As soon as the recession took hold and property prices began to fall, the yuppies who had been moving in, because it seemed a clever thing to do, all started to move out again. Huge areas of Docklands remain a wasteland, pitted with half-dug foundations, mounds of sand and unused bricks. It will probably never become the bustling part of the metropolis envisaged when plans were being laid in the 1980s.
In this sense, abandoning Canary Wharf is simply admitting the truth. The Docklands experiment has turned out to be, in large measure, a pipe-dream. It is too far away, too inconvenient, too uncomfortable. There is no point continuing to harbour the illusion that one day it will become a fully functioning part of London.
Why don't we wave goodbye to Canary Wharf and spend all that government money on repairing the existing underground system instead?Reuse content