Ross Clark

Donald Trump is right: the sale of the US embassy was a bad deal

Donald Trump is right: the sale of the US embassy was a bad deal
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The anti-Trump forces have been having a field day on Twitter with the hashtag #ICancelledMyTriptoLondon – poking fun at Donald Trump’s claim why he called off his trip to London to open the new £880 million US embassy.

The President claims he can’t bear to cut the ribbon because the Obama administration got itself a bum deal by selling the old US embassy in Grosvenor Square for ‘peanuts’ and moving to a secondary location south of the river. The real reason, we're led to believe, is that Trump is scared of the street mob.

I doubt if either explanation is quite right. More likely is that Trump thinks he wouldn’t receive the public adulation in London he thinks he deserves.   He certainly won’t be frightened – and would almost certainly enjoy – a few protests.

But then he isn’t wrong about the deal to sell the Grosvenor Square Embassy, either. It almost certainly was a bum deal. Trump might struggle when it comes to foreign affairs and many other things besides, but it is a bit rash to challenge his knowledge on property values, which has been his obsession throughout his working life.

Trump has an advantage over the rest of us – he will have access to the classified information of exactly what the US sold it for to the Qatari Sovereign Wealth fund in 2009. The price is rumoured to have been £500 million. But it is plain that it must have been a lot less than it is worth now.

The beginning of 2009 marked the bottom of the property slump, when heavily-indebted investors unable to roll over their debts were forced to dispose of property at knock-down prices. The US government is itself heavily-indebted, of course, but also has rather better access to credit than your average developer or property investor. There is no reason why it should have been forced to sell its embassy at the bottom of the market.

Finance for the building of the new embassy could surely have been found from elsewhere and the US government have waited for better times to sell off the Grosvenor Square building. That is surely what would have happened had it had a property mogul as President in 2009.

Moreover, would a Trump-led government have chosen Nine Elms? It is doubtful. Whatever his other faults, I suspect that Trump would insisted on the embassy remained in a Central location and would have spotted that Nine Elms – where flats have been shamelessly marketed at Far Eastern investors likely to buy, but not live in them – was a bubble waiting to burst.  According to property information company LonRes, prices per square foot in Nine Elms tumbled 6 per cent in the year to last June as those investors lost interest in London.

Trump’s critics are quite right to point out, by the way, that the decision to move the London embassy from Grosvenor Square to Nine Elms was made in 2008 - ie, under George W Bush. But the sale of the old embassy went through in Obama’s time, so he is not entirely wrong to address his ‘peanuts’ comment to his immediate predecessor.