The 10 worst property investments ever

Homeowners across the land are holding their collective breath as daily reports show the housing market threatens all out collapse. The likelihood, however, is that losses over the next year or two will not nearly be enough to reverse the huge gains of the last ten years.

But not every real estate investor is this fortunate. We've put together a list of the ten worst property investments ever. In the unluckiest or most calamitous of cases, the losses run into the millions...

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.

By James Charles

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Comments

[Half Baked]

This article is half baked nonsense.

Certainly not "Advice you can bank on" from The Times.

Is this The Times or is it the Sunday Sport?

[Someone]

Whoa what kind of hotel is that? It looks like some kind of spike in the middle of the city. I would really wish whoever decide to build it have some degree of general art taste

[Scott]

I know city centre flats are suffering at the mo but the press only highlights the extreme like the ones noted in Leeds- I very much doubt many people could buy for over 200 k then sell for 70k... Whatever people think of BTL and these flats they will rise again in the future and only people that are selling are having too

[celso - london]

How about energis??? I lost £2K and wa given an unconvincing explanation as to what really happened...

[Daniel]

Lehman Brothers purchased an office building in La Defense for 2B Euro back in 2007. Now worth about 1B. Great investment.

[Ken Davies]

I thought Canary Wharf had a good transport system, but I now learn that it has a "zippy transportation system". Hopefully to Botany Bay.

[Anthony]

I have no sympathy for BTL's who have been stung by the great city-centre flat con. They wanted to be selfish and get rich quick and to hell with the people unable to afford a home. Now its blown up in their faces and they want taxpayers money to bail them out. Tough. They took the risk and they lost. Simple.

Why would anyone pay £240k for a flat anyway. For the same price you could get a large four bedroomed house in a nice suburb. You may have to travel further to get to work but at least you won't get stung by the Council for £1500 a year for one parking space.

If developers are left with huge losses then good. They were happy to make stupid profits for years whilst knocking out shoddy cramped boxes at vastly inflated prices. You reap what you sow.

[DK]

The articles about PROPERTY investment. The author may not be well read but you don't read well Phil.

[Jamie Lear]

Canary Wharf is in E14 not E12...More lazy journalism.

[Ad]

The author of the article has not done his research - the biggest property disaster has to be BC Partners purchase of Foxtons for £390 million. Flogged a dead horse..

[Chris C]

Michael Tan. UK land banking plots may be promoted as a good Islamic investment as its not interest earning. Unfortunately all experience to date shows that the chances of getting any of original investment back or any profit are zero. It does seem odd that these obviously dodgy schemes can't be shut down until it can be proven that investors have lost their money.

[Mark]

Landbanking should be top 5. These rubbish plots are still being sold all over the world as the great british land investment opportunity.

Spanish property will bounce back eventually. The land banking plots are being sold at 10 - 15 times their true value. Some people will never recover from that.

The UK authorities should be deeply ashamed of allowing these sales to continue.

[David]

#2 Spanish Property slumped 65%?

One can only assume that this applies to the- previously- vastly exaggerated prices being asked on the coast.

We are only seeing a return to more reasonable prices for what are principally holiday homes.

Why should areas with all the ammenities and employment opportunities of Exmoor (with sunshine) command more than in Madrid or Barcelona?

The prices in the area in which I live (central Madrid) have been static for the past 2 years.

If people- Spanish and British alike- have got their fingers burnt with property speculation then I have no sympathy for them.

And moreover; I'd say that costal properties have more to fall, think 1500-2000€ not 6000-8000€ per m².

Please try not to lump together the general situation of Spanish property with Spanish holiday homes as it gives a skewed perspective of what's really happening.

[David]

#2 Spanish Property slumped 65%?

One can only assume that this applies to the- previously- vastly exaggerated prices being asked on the coast.

We are only seeing a return to more reasonable prices for what are principally holiday homes.

Why should areas with all the ammenities and employment opportunities of Exmoor (with sunshine) command more than in Madrid or Barcelona?

The prices in the area in which I live (central Madrid) have been static for the past 2 years.

If people- Spanish and British alike- have got their fingers burnt with property speculation then I have no sympathy for them.

And moreover; I'd say that costal properties have more to fall, think 1500-2000€ not 6000-8000€ per m².

Please try not to lump together the general situation of Spanish property with Spanish holiday homes as it gives a skewed perspective of what's really happening.

[Craigywaigy]

I'd say they probably are fraudulent Michael but whoever does that in your country has some guts, as I'm sure they have real penalties for people who attempt to destroy the lives of others to satisfy their greed in,... Malaysia.

Enrique, you are right. My brothers are still buying, renovating (to a higher standard than the locals seem capable of) and selling to brits in Bulgaria. The place is stunning too (Veliko Tarnovo) but freezing in winter I suppose much like Canada but kind of 3rd world.

The thing is, they are putting in real work, and indeed providing work to locals. Furthermore, the local builders are getting a higher standard of building experience my brothers have (South Africa, UK, NZ, Australia).

If fast money charlatans were not allowed to get away with greed, doers, people who actually create would always have work.

[Michael Tan]

Here in Malaysia, companies are promoting investments in land in UK ... UK Land, Profitable Plots, and others are doing heavy promotion. I feel they are fraudulent as my 2 brothers in the UK think too.

[Enrique]

First of all sorry for my low level of english. Well, I think that during 2008 & 2009 There will be a lot of oppotunities of buying "low cost" houses, apartaments near the sea. May be The Times would prefer that it readers invest in Morocco, romania, or Bulgaria where i gess there is no corruption. mean while, the greatest investors are taken position waiting for those opportunities i´ve said... because building is our first and best industry... we have the best know-how
Do I have to take my money out from Barclays because Nothern Rock? Do I have to drink evian because Aquarel?
Best Regards from a sunny day in Costa del Sol!

[Vincent Wong]

Tim, you're right in saying that there are still people living in Leeds but you'll also need to property comparables. £240k for a 3-bed property was clearly inflated by developers to start with so now the sold price of 71k for this flat is propably 25% below the current full market mvalue of this property, i.e. 95K. If you don't believe me, go to Hometrack and look at the comparables of current 3-bed properties in Leeds.

So the 50% dropped in "value" has taken into account the original massive over price paid by the unfortunate investor to the developer.

[spod]

A little one to tack on the end, because it's of local interest. Right next door to News International is a large shopping centre called Tobacco Dock. It opened 18 years ago and was full of shops. Now it has a lone sandwich bar. It must have lost its owners millions over the years.

[Manuel]

The price of the propierties in Spain is falling very fast, and it´s only the beggining...

[Mark, Switzerland]

Sadly the gleaming spires of E12 remain empty and probably will stay that way as they are a very long distance from E14.

[John]

Soon, you'll be able to add the Irish property bust to this list...

[David Hume]

UK - centric.

[George]

Sizewise, there are at least 4 bigger busts that did not make the list: SoCal early 90's(you might want to add Texas and Canada after their 80's oil boom to that), Hongkong mid 90's bust, Japan of course and (East) German Real Estate from mid 90's up until recently

[Mike]

Er, Phil1 - this is not about bankruptcy, it's about bad property investment: direct property investment.

The author is probably quite well read. You, unfortunately, apparently can't read at all.

[Dean]

Barry Gibb just earned 1.5 million pounds in the time it took me to read the article, so the fire ranks more as a cultural tragedy more than as a financial disaster. And he still has a beautiful lakeside property in a nice part of the country.

[Moses]

With regards to Hoogstraten's "palace" in Sussex (No. 7) - the right of way isn't that of the Ramblers' Association (not Rambling), but is a public right of way, which everyone can use. Effectively, it's the same as blocking an unpaved public road.

[Tim]

Your #8 is nothing short of nonsense. Poorly researched unnecessary scaremongering with a lack of any sort of evidence to back up ridiculous blanket-statements.

99% of owners would not SELL their flats (however they bought them) for 40- 50% below whatever value you give them. Why would they? The case you have in point may only have had a 71k mortgage on it, thus if it had been repossessed (as seems likely) the selling lender is only obliged to cover the loan, nothing more.

If they have any more I will buy all of them, as Leeds still has PEOPLE in it who need to lvie SOMEWHERE and I bet the return on a 3-bed flat will be truly excellent at that price.

[elizabeth]

in relation to the Spanish property crises... as a receipient of the greed of the developers in Spain the situation there is every bit as bad as they are saying, im fact i would say they are being kind in what the newspapers are reporting and i would say that it is actually worse than we are being told. Each day there are more and more arrests in connection with the property scandal. First there was operation "malaya" with hundreds being arrested for fraud, now the latest series of arrests under "operation astapa" where 14 people have been arrested this week. So believe it when I tell you it is bad indeed.

[Pity the Fool]

The outline of the hotel of doom looks like a graph of house prices...

[BEN]

Phil I think you are clearly not someone who is widely read.

[Tom]

Phil1 - did you not read the headline?

[Arturo]

The crisis of the Spanish property market is not so apocalyptic. I think you are writing by hearsay. However, if the Brits do not want to come here, there is no problem at all.

[Phil1]

Well I would have thought Northern Rock would have appeared - first bank run in over a 100 years and now the shares are valueless.

Or what about Cable & Wirless of a few years ago another great share or Enron etc. Or the south sea bubble or the tuilp scams of the past or even UK pension provision taken out 30 years ago.

The author is clearly not someone who is widely read.