If I ask you "What does Canary Wharf represent?" Most of you will answer: Modern Builings, Working area, Financial place and others examples...
But before this current reputation, CW was only one of the busiest dock in the world. During the second WWII, the area was damaged and the contenarisation laws caused the closure of CW. But after this period, there is a "rebirth period". La City was saturated with old buildings and high costs for the firms. But the Financial Deregulation appeared in 1986, and the firms were asking for new area and space.
In 1981, the London Docklands Development Corporation decided to encourage commerce in this area by setting up an "Enterprise Zone". In 2004, a consortium of investors led by Morgan Stanley under the name of Songbird purchased the Canary Wharf Group.
Nowadays, Canary Wharf is the second financial place with a working population of 93 000, 30 buildings, 3 shop centers and many expansion plans.
At this moment, the economy of the UK is not doing very well, due to the current financial situation:
- Lack of confidence: FTSE 100 dropped by more 33% in one year
- GDP forecast for 2009 is very low: 0.1%
- The unemployment rose every day (look at City Group, HCBS...)
- Purchasing power is decreasing also everyday
In this context, How a financial crisis can affects a financial place like Canary Wharf?
The first step of the collapse was due to the bankruptcy of Lehman Brothers on the 15th of September: LB was contributed by 14% of the total revenu of Canary Wharf (leasing a very big bulding). LB fired 5000 employees. The group of Canary Wharf reacted very strongly because the share price dropped by 9% after this annoucement.
On the 26th of September, HSBC cut its workforce by 500 employees.
After that, Group's Plateau (famous restaurant in CW) had seen its booking decreasing by 25%, Ubon restaurant (sushi one) closed and the housing prices dropped by 10%.
The financial crisis affects the Financial Place. Songbird Estated annouced a loss of 470 million pounds, a possibility of default in leasing payment and an increase in the vacancy rates.
Since 2007, the share prices of Songbird Estates Collapse by 88%.
So even if London is well known for its superiority in term of financial place (London Stock Exchange, Largest FX center...), both La City and Canary Wharf are affected, because they are like a city in the city and directly correlated with the people which are working and suppose to earn money.
So what is going to happen if the economical centers like Canary Wharf began to collapse?
My sources are available here:
•Boyle, C (2008) Songbird Estates suffers a £470m loss as banking crisis at Canary Wharf bites, business.timesonline.co.uk
Date viewed: 10th November 2008
•Reuters (2008), Canary Wharf firm says property values dip 10 pct, in.reuters.com
URL: http://in.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idINLP53459320080925
Date viewed: 10th November 2008
•Financial report (2007)
Date viewed: 10th November 2008
•Real time equity news (2008), advfn.com
Date viewed: 10th November 2008
• Economic and financial indicators (2008) The Economist 1st-7th November 2008, p121
1 commentaire:
I think it was a quite interesting article with good historical overview and analyse about what's happen now.
I am totally agree with you because a financial place is the most economical place in the City. If the economy collapse, the overall financial place collapse too.
Thanks again
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