The New Feudal Land Rush
Economic crises are notoriously the great testing grounds for the restlessly innovative spirit of capitalist enterprise. Adversity refines the mettle and taxes the imagination of your plucky entrepreneur, who doggedly carves new fortunes out of the main chances the chastened market affords for his wares. In the shadow of economic defeat, a thousand crisitunities bloom.
Or you know, maybe not. From across the pond comes an arresting Financial Times dispatch on how the global credit crunch has been an enormous boon for the hoariest brand of economic elite: the titled aristocracy. As global land speculators pack up their debts and head for the exits, the cash-rich beneficiaries of the Old-World bolt from their club chairs to expand their real-estate fiefdoms. Or, as FT correspondent Richard Warren puts it, altogether more discreetly, British aristos “have built castles, mansions and more for thousands of years but the combined effects of the credit crunch, legislation and financial need have encouraged a new wave of land acquisition and property development.”
It helps, of course, to leverage centuries of inherited privilege into collateral. “Ian Monks, partner at Bidwells, says UK aristocrats get loans when many other prospective purchasers cannot because their estates can be used as security. Better still, many have enough cash not to need loans, he says. ‘When times are booming they [aristocrats] don’t appear to do very much but at times of adversity they have quite an ability to get on and do things.’”
It also helps to lubricate a layabout lord unaccustomed to the rigors of activity with a tax break or two. A 2007 law permits a 100% tax writeoff for neglected farm buildings converted into commercial uses, so, Warren notes, “to help maintain their expensive mansions, rural bluebloods have turned disused barns into offices and stable blocks into studios for business people tired of commuting.”
Likewise, tail-end-of-the-Thatcher-era “legislation in the 1990s made it possible for greater numbers of residential leaseholders to buy their freeholds,” creating in the landed caste the tonic appetite for additional streams of cash revenue. “Prior to leaseholder enfranchisement, the great London estates made money from renewing 60-year leases, so the loss of these regular capital payments has meant they have had to find new sources of income,” Warren notes, courtesy of a far pithier observation from the director of one such estate, Simon Baynham, to the effect that this unaccustomed churn in capital flow meant that the lords of inherited land had “to pull their socks up.”
All this virtual spats-securing has made for some odd new real estate alliances, with for instance, the Duke of Bedford forking over £14.1 million for the swinging Time Out home offices in Totenham Court-just one morsel in the Bedford Estate’s 180-building Bloomsbury empire. No less an eminence than bonny Prince Charles is the principal landholder in a community of 5,000 souls known as Poundbury in Dorsetshire, via his splendidly capitalized Duchy of Cornwall. He’s also planning to launch an 850-home development in one of his home provincial baronies of Newquay.
And the siren call of leveraged property is by no means confined to the monarchy-besotted Sceptered Isle. With most credit-starved real-estate holdings across the globe now very much buyers’ markets, they are plopping like so many crumpets into the laps of privilege. Monaco’s Prince Albert II is soldering a deal with his island monarchy’s state-owned resort concern, Monte Carlo SBM and a partner named Aeirum Atlas Management, to launch a sprawling leisure development in Marrakesh, Morocco, with a private spa and resort and 25 multimillion-dollar homes. Even the now-beleaguered Shiekh Mohammed bin-Rashid al Makhtoun of Dubai, the world’s best-known royal real-estate baron, recognized the many advantages of British aritso-land speculation during the height of his own money troubled last summer, and plonked down a cool £45 million for a landed estate in Newmarket, Cambridgeshire-the greatest sum ever paid for an English agricultural estate.
Of course, not every royal eminence is poised to cash in. The Slovenian Prince Constantin zu Windisch Graetz, for example, can do little more than sulk from his London exile as other titled dopes from mittel-Europe join the land rush. That’s because his ancestors were just a little too delirious for property back in the day; he’s heir to 15 castles and some 250,000 hectares of family land-more than half of the country’s overall territory. Hence this wrenching testimony: “‘We are pretty high up on the most hated list in Slovenia,’ sighs the prince. ‘They just don’t want to give anything back because as soon as they give one thing back, then they have to give it all back.’”
It is vaguely heartening, one supposes, to see that the global aristocracy is still able to recognize that primogeniture is no longer the foundation of divine right. Still, we don’t see why the good prince should be so mopey. All the new feudal landed order needs is a capable free-market propagandist to paper all these titled deals over into the image of demotic creative destruction. Candidates abound, after all-can’t you just picture a future Tom Friedman column trumpeting the news that Country Estates Are Flat? Or a forthcoming Steven Levitt-Stephen Dubner collaboration touting the funky virtues of Scepternomics?
Richard Florida would weigh in, of course, with cutting-edge rhapsodies recounting how the mercantile Crown-financed age of exploration actually sowed the seed for the multiethnic bohemian street scenes that are catnip to yon Creative Class. And in exchange, these brave intellectual rentiers would be rewarded with prime terms on their own 60-year leases, and-dare to dream-new family crests. I can see it now: Milton Friedman and Prince Albert II, joined in holy battle against a retreating rearguard of federal bureaucrats and regulators, the Time Out logo streaming down, majestically yet munificently, from a banner overhead.
Chris Lehmann would gladly leverage his family estate for some tax benefits.