My primary content creation this week (outside of work) has been over at this post on 21square.com
Here are my comments:
Posted by: De Onion | May 10, 2007 at 08:19 PM
The real pessimists ask “What’s the opportunity cost of two decades of undeveloped Bermuda land with a large eyesore on it… and also “How much would that land be worth if we were to sensibly subdivide it into small lots, park, and commercial areas to allow the Town of St. George’s to be expanded onto that land, complete with modern small lanes and cute houses.
Urban village style… except of course… just another village, complete with fast ferry service down North Shore (which is where the St. George’s Ferry should leave anyway to be fast enough to compete with car travel).
Of course, then housing prices would fall, capacity for productive expats would increase, and we’d all have a higher standard of living.
…and nobody wants that, because it robs the politicians of a political point scoring and a photo opportunity. Which, let’s face it, is what really matters.
Posted by: Denis Pitcher | May 10, 2007 at 09:37 PM
I’d agree with you if you were referring to southlands. I would rather see that turned into a mix of urban living and parks that best utilized the space.
As for Club Med, I’m still on board with it being turned into a decent hotel.
Posted by: De Onion | May 10, 2007 at 10:11 PM
The advantage of Club Med site vs. Southlands is that it has the non-road links to the City of Hamilton in the form of a fast, convenient ferry route that could replace St. George’s, as well as continuing the general urban pattern of the town St. George’s… which is one of Bermuda’s true wonders in terms of being aesthetically pleasing for visitors as well as a really nice place to live.
The question that needs to be asked is “What’s the value added by a hotel in St. George’s?
– As far as I can see it’s pretty minimal since it’s using a large amount of our limited transport, space, and other resources for economic activity that really doesn’t generate the kind of foreign exchange to really compete with international business in terms of value added. What I mean is that it does not create many high-paying jobs, since a hotel must hire low-rent workers from third world countries to be cost competitive and secure a reliable labour force, the profits will flow offshore into a foreign shareholder’s pocket, the financing will likely be done by a foreign bank, so you end up with really low local economic multiplier beyond a very temporary construction income – which is not a true capital asset and is akin to the government spending money to boost the economy – looks good for a few months but in the long run nobody is better off.
You have to ask – what would the market do if this piece of property were to be given to its highest economic value – ie. what would the land sell to a hotel developer for per square foot? What would it sell to individuals for per square foot (assuming it was well designed to allow quality high density living). There’s not much room on this – on a per square foot basis we get far more from housing.
Not only that, but the potential hotel deals also essentially involve selling part of Bermuda to a foreign company which is at odds with my belief that we should own Bermuda, as well as own as much as possible of the rest of the world.
I would much rather see a decent effort to figure out how to allow the market to create a few hundred extra houses that are really nice places to live. It’s a bit of a false dichotomy, but following this I would like to see government stop trying to piss off international businesspeople by making their and their staff’s lives difficult and instead figure out how to make it easier for foreign businesses to make more money by being in Bermuda – ie. make it easier for them to attract/retain the best people, then you end up with higher-level business going on here, more competition for talented Bermudians, higher wages (since there’s still a limited labour pool, by increasing the housing stock there are lower costs of living, so those people not able to participate directly in the wealth increase at the elite level are still better off through both general wage inflation and greater supply of the most restricted consumable item – housing. By making Bermuda a better, easier place to do business we give ourselves more leeway to have really high salaries (because we can create more compelling reasons to have a presence here to overcome the high labour cost). Maximize wages while lowering housing cost with minimal cost to traffic additions and no destruction of Bermuda’s distinctive look – in fact it’s better after removing that huge eyesore – and we all win. Big time.
These things are all connected, but the simple summary is that with a hotel nobody wins but the people in the photo op.