Sunday 22 September 2019

Home Truths: An island that's easier bought than Greenland

The big view on Ireland's property market

Greenland: The Danes have dismissed Donald Trump's offer
Greenland: The Danes have dismissed Donald Trump's offer
Mark Keenan

Mark Keenan

Give a big real estate guy with a giant ego the top job on the planet and it's only natural that his site acquisition proposals will become considerably more ambitious.

Should we be surprised that US President Donald Trump, a lifelong real estate bug, who has spent years acquiring top sites in big cities to build enormous Trump Towers or hotels, has now attempted to buy Greenland, the largest island on the planet? And with a cool 60,000 Greenlanders (very cool) thrown in?

Trump subsequently cancelled a visit to Denmark because the Danes snubbed his offer for this very promising piece of development real estate. The Donald likely thinks they're just playing hard to get. History tells him they have form.

Another reason we shouldn't be surprised is that US presidents have bought countries, bits of them, and provinces and states; on a regular basis since the foundation of the United States itself. In fact most of the United States has been bought by the United States; through land deals done by different presidents.

In 1803, the Americans noticed that Napoleon Bonaparte was looking about for the cash to fund an enormous seaborne invasion of Britain. So an expansive President Thomas Jefferson sent James Monroe to wheel and deal. The latter offered the dictator $15m for all of French North America. Napoleon readily agreed, and the US bought Omaha, Montana, South Dakota, Nebraska, Kansas, and Louisiana as well as the bits they were missing of Minnesota, North Dakota, Wyoming and Colorado. In all, an extra 828,000 square miles. Allez Jefferson!

Later Monroe himself became president and got his real estate nose into Spain, badgering it to sell Florida.

Spain (like Denmark) was sniffy at first, until 1819, when it discovered it was broke thanks to wars with Napoleon (presumably spending his American loot as he never got that British trip going). Florida was proving too expensive to administer and protect for Spain, not least because soldiers like future president Andrew Jackson (then a general) kept making blatant military incursions into it. So Monroe upped the ante to $5m and Spain shook on it. Another 65,000 square miles or so in the bag. Olé!

President Andrew Johnson, who began reconstruction after the devastating American Civil War, thought it might be nice to extend the place again while he was at it. So in 1867 he asked Secretary of State William H Seward to look into buying Alaska.

Over in Russia (which owned Alaska), Tsar Alexander was looking into developing a vast railway network. Russian America, as it was then called, and populated by Siberian fur hunters and Inuits, was unwieldy and costly to manage. The Russians also feared defending it against Britain, installed next door in Canada.

Secretary Seward offered $7.2m and the Russians bit his arm off. Another half a million square miles. Soon afterwards gold was discovered in commercial deposits and later vast oil reserves. Prudhoe Bay is still the largest oil field in North America. So a good deal for President Johnson, niet?

These can be added to California, Texas, Arizona and Nevada (500,000 square miles), annexed after the US started a war with Mexico and smashed the place up in 1848, likely because the Mexicans wouldn't sell. The Americans then went back to the Mexicans to buy remaining bits of Arizona and New Mexico they wanted for $10m. It was an offer Mexico couldn't refuse. Olé again!

And if the Danes seem insulted at President Trump's recent Greenland for greenbacks proposal, we should point out they have previous form selling international real estate (with population).

From the 1850s they were approached by both Americans and the Germans over the Danish East Indies. Secretary of State Robert Lansing dived in first to shake hands with the Danes in 1917 for $25m, on what is now the American Virgin Islands. Dane deal!

Where the US hasn't bought, it leased. It pays rent of $4,000 per annum for the 40 square miles of Guantanamo Bay, the US base and detention centre in the south of Cuba. The lease was initiated in 1903 and renewed in 1934 with a stipulation it can't be terminated without the consent of both sides. The Cubans aren't happy. They don't cash the rent cheque. But the US has its navy base. Ay Caramba!

In 1946, President Truman asked the Danes if they'd go again for Greenland for $100m. But the Danes didn't bite and Truman didn't up the offer.

In America's most recent Greenland punt The Donald had his beady eye on the Chinese who have been investing there, and indeed in all parts of the world at pace and may be matching the historic American record for land purchase, albeit on a more piecemeal basis.

Last year a Bloomberg report estimated that the Chinese have invested $318bn in Europe in 10 years. They acquired a dozen key office tower blocks in London's commercial centre. Across Europe they have bought four airports, six sea ports and 13 professional soccer teams (!). Knight Frank estimates that 43pc of all non-local residential property purchases in London in 2018 were made by Chinese or Hong Kong buyers.

But here in Ireland, it is still the Americans who are most active with the real estate cheque books. A 2016 survey showed how foreign firms were buying 70pc of Irish commercial property and last year it was revealed that one third of all Irish new homes are being bought by overseas firms, largely American funds.

This situation has been enabled by our Government's legislative changes to facilitate build-to-let blocks for funds along with a free tax ride. Trump didn't even have to make an offer. Because unlike Greenland, Ireland is an island that is far more easily bought.

Fíor uafásach!

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