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The worst property investments of all time

In recent months we have seen and heard of some terrible investments on the stock markets and by financial institutions in general but in terms of the property market we look at some of the worst investments, globally, of all time.

1. Hotel of Doom

The North Korean government is looking for $330 million from foreign investors to finish the pyramid shaped Ryugyong Hotel, which towers 1,083 feet over central Pyongyang (see picture, above). The massive concrete white elephant is known locally as the “Hotel of Doom”. It was conceived as a flagship project for the communist government, but embarrassed officials have since wiped it from official maps as building work floundered due to lack of cash.

Construction was eventually put on hold in 1992 when the project ran into financial difficulties, but work has reportedly started again. When completed, the hotel will boast 3.9 million square feet of floor space and seven rotating restaurants. North Korea has already sunk $750 million, of 2 per cent of its GDP, into the building, but it is unclear how many rooms the hotel will boast, or how many visitors are expected when it finally opens.

2. A place in the sun

The brochures were too good to be true. Buyers gazed in wonder at those shimmering golf courses - yet to be built; the beautiful beaches - only a short two hour drive away; the lively restaurants and bars - now abandoned; and those glorious villas - mostly unsold.

Thousands of British ex-pats, wanting to live the dream of eating a full English on their own patio gazing out over the Mediterranean, are facing up to a Spanish property nightmare. Prices have slumped by up to 65 per cent in the last year according to some websites, as the market is struck by a country-wide collapse in house values and massive overdevelopment on the Costa Del Sol. In the most acute cases, Brits who have bought off plan are now stuck with apartments in uncompleted developments they don’t want but can’t sell.

3. World’s largest shopping centre

Investors in the new shopping malls opening in west London, Liverpool and Bristol over the coming year will hope the centres prove more successful than the world largest and possibly emptiest mall, in Donguan, southern China. The gigantic centre opened in 2005 and is four times the size of Bluewater, in Kent, with 6.5 million sq feet of retail space. However, the owners who sunk millions of dollars into the project have persuaded only a dozen stores to open. Still, shoppers dispirited by the lack of retailers can instead take a trip down a Venetian canal leading onto a replica St Mark’s Square, enjoy a ride on the indoor roller coaster or grab some food under a giant 80ft mock-up of the Arc de Triomphe, all added in the vain attempt to increase foot fall at the mothballed mall.

4. The collapse of Nation Life

Thousand of private investors lost their life savings when one of the UK’s first property funds, Nation Life, collapsed in 1974. It was part of the property empire of tycoon William Stearn, who holds the title of the UK’s biggest bankrupt, after losing £118 million. When banks stopped lending Nation Life money, the holdings quickly ran out of cash and had to fold. The Policyholders’ Protection Act was passed in 1975 as a direct result of Nation Life’s losses, but there were no compensation schemes at the time to prevent thousands of small investors from losing everything. In April 2000 William Stearn was banned from serving as a company director after a second commercial empire worth £11 million collapsed.

5. Poor Barry Gibb

It may not have been the worst property investment, but it could certainly be the unluckiest. In 2006, Barry Gibb, one third of spandex-covered falsetto super group the BeeGees, blew £1.5 million on the one-time home of Johnny Cash in Nashville, Tennessee. The bearded former hunk sunk huge amounts of cash in the project, thoroughly renovating the three-storey timber house. Sadly, weeks before work was due to finish on his dream holiday home, tragedy struck when a devastating fire ripped through the property, causing wide-scale damage.

6. Canary Wharf

It was a squalid stretch of land home to an abandoned watery industrial estate, miles from any decent forms of public transport. But Michael von Clemm, chairman of Credit Suisse First Boston, spotted an opportunity. On a visit to the site in the early 80s he envisioned spending billions of pounds of private and public money building 12 million square feet of office and retail space. It was music to the ears of local developers. Welcome to Canary Wharf, one of the most audacious urban regeneration projects in Europe and a fitting monument to Thatcher’s free market revolution. It arrived complete with the tallest building in Europe (at the time) and even its own zippy transportation system. Sadly, just two years after its iconic office block was completed, the London property market collapsed. The gleaming towers of E12 stood half vacant and in 1992 the company behind the estate, Olympia and York Canary Wharf Limited, filed for bankruptcy, losing millions of pounds of investor cash.

7. Hamilton Palace

Notorious businessman and property owner Nicholas van Hoogstraten has sunk £40 million of his own money into Hamilton Palace, a spectacular vanity project sitting in the rolling Sussex downs near the small town of Uckfield. It currently lies abandoned and incomplete after reports of a disagreement with builders. Mr van Hoogstraten, who was one of the UK’s youngest millionaires, has also apparently been at war with the Rambling Association who believe they have right of way across his land.

8. New-build city-centre flats

Thousands of newly-built urban apartments have flooded the market in recent years, dominating northern city skylines, but now prices are plummeting by up to 70 per cent. New-build blocks attracted amateur buy-to-letters eager to earn a quick buck from the property boom. But now many fear they paid vastly over the odds. One report cites a three-bedroom apartment in Kelso Heights, a development near the University of Leeds campus in the centre of the town, which was recently sold for £71,000. It was bought in 2006 for £237,999. Flats in certain developments in areas such as Manchester, Newcastle and east London have also fallen in value by 40-50 per cent.

9. Land banking

Investors have lost thousands of pounds to “landbanking” firms in recent years. Dodgy companies buy tracts of greenbelt land, then sell chunks of it to individuals on the promise that when houses need to be built on their acres of countryside, the value of the land will soar. This will happen a couple of years after their purchase, investors are told to convince them to hand over cash. However, it isn’t that easy to get rich quick. It emerged that many of the schemes fell within areas that local authorities said would never gain planning permission for new homes, or at least not in the lifetime of the devastated investors.

10. Debbie does bankruptcy

Shy and retiring are not words usually associated with the Hollywood legend Debbie Reynolds, star of classic musical Singin’ in the Rain and mother of actress Carrie Fisher. In the mid-80s Debbie decided to open a hotel in Las Vegas, modestly titled the Debbie Reynolds’ Hollywood Hotel and Casino. The centre showcased her illustrious career and also contained her full collection of Hollywood props and costumes, including the headdress used in Cleopatra. Sadly, the world wasn’t ready for such a Debbie Reynolds extravaganza, and the project flopped. Debbie had opened the hotel with her then husband, real estate developer Richard Hamlett. But the couple divorced and she was left with picking up the bill for the failed venture. In 1997, poor Debbie was forced to file for Chapter 11 bankruptcy protection.

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