London Office should be ours
As the British Parliament struggles with the chaos of a soft Brexit, or heaven forbid, a no-deal Brexit, the British economy and more profoundly British businesses — supply-chain businesses intertwined with the European Union — are preparing for a no-deal Brexit. But, as odd as it may sound, there are some opportunities that Brexit does render up under all the chaos.
Last Thursday, the Governor of the Bank of England, Mark Carney, stated that Britain’s interest rate will remain at 0.75 per cent.
That Central Bank rate influences all other interest rates such as commercial and housing mortgage rates and consumer loans, but it is commercial interest rates that yield the most attractive opportunity right now — the opportunity to get into the commercial real estate market for the long term.
Because commercial interest rates can be had between 4 per cent and 5 per cent, and that combined with the foreign exchange rate on the pound sterling hovering between $1.29 and $1.30, it is now the perfect storm of opportunity to purchase a commercial building that can be the permanent home of the Bermuda Government’s London Office.
It has been ten years since the London Office first opened, and now the start of another ten years — a renegotiated short lease — the rent already paid for this office space could have been mortgage payments on commercial real estate that the Bermuda Government owes in London.
It is now time to take advantage of the rare opportunity to buy a commercial building to house the London Office rather than sink more money into rents; after all, whether Bermuda becomes an independent country or remains an Overseas Territory in the next 10, 15 to 25 years, the island will still want to have its diplomatic/commercial presence in London — the gateway to Europe and beyond.
But, note, I cannot speak to the missteps of the Washington Office lease because irrespective of whether one agrees or disagrees with how either political party has handled it in Washington, this rare window of opportunity to purchase at such favourably conditions in London will not last indefinitely.
But you could look at the price of office space in Washington, London and Brussels, and come to the most obvious conclusion that we are paying more than enough to buy a building to house our diplomatic/economic interests overseas. So, logically, it should be where we have the strongest ties constitutionally, diplomatically, politically and educationally, and where we need to strengthen our ties economically and culturally — London.
The commercial market is buoyant unlike the housing market, which is taking a real hit as house prices dive monthly.
Now overseas investors are pouring into the commercial real estate market from all over the world, most notably from China and the Middle East. And they have purchased and continue to purchase large swaths of commercial real estate in London.
This is an opportunity to get a building that can become Bermuda’s diplomatic, economic and cultural arts centre, and that can create new opportunities for businesses in Bermuda in unique ways.
I am confident that the Bermuda Government has considered this opportunity in earnest, so now is the time to act rather than sit by and watch Brexit unfold because by then this window could be closed, or even priced beyond our reach.
VALIRIE MARCIA AKINSTALL