Talk about a real-estate deal gone bad. The city of Vancouver – which is the site of the 2010 Winter Olympics – wants to borrow roughly $370 million from British Columbia to finish construction of the athletes village. If BC doesn’t come through with the financing – which I assume they will – what does that mean for the games?
Vancouver was left holding the bag after the project lenders, led by the US hedge fund Fortress Investment Group, stopped advancing money to the developers last September amid rising construction costs and concerns that the economic slump would make it hard to re-sell the Olympic housing to homebuyers after the Games were over, according to this report from Reuters. The upshot is that the city could be on the hook for the entire $715 million it’ll take just to build housing.
If 2008 truly marked the end of consumerism, laissez faire capitalism, etc., etc., then 2008 might also have marked an end to the over-the-top effort of Olympic host cities to outdo the prior Games—so much so that the efforts became as much the story as the accomplishments of the athletes. Even before the 2008 Summer Olympics were finished, London had signaled that it couldn’t match the amazing ceremonies that opened and closed the Beijing games, and I think the Olympics going forward are going to have a much more subdued tone. It wouldn’t surprise me, frankly, if the Olympic organizers start going back to past hosts like Seoul, Atlanta and Salt Lake and asking them to stage future games, if new applicants are unwilling or unable to front the billions in costs it takes to stage an Olympics from scratch.
Only two cities—Atlanta and Los Angeles—have turned a profit from hosting the Olympics, and some like Athens were left with a hulking debt load and little residual economic benefit. (According to this 2005 article in The Wall Street Journal, which discusses whether hosting Olympic games are worth the effort economically, the city of Montreal only in recent years finished paying for the Games it hosted in the 1970s.)
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.