Last week, the property press ran the tantalising story that parcels of Lord’s cricket ground were up for sale by New Commonwealth, an enterprise which describes itself as a “new property-owning democracy” that provides “access to prize assets for the man on the street, not just the landed elite”.
Of course, part of Lord’s is not really up for sale. This is in fact the latest chapter in one of England’s longest running property sagas which began in 1890 when the Great Central Railway wanted to purchase part of the famous cricket ground to construct its railway. A compromise was reached and they acquired a 200 by 38 metre strip under the eastern edge of the cricket ground (known to cricket fans as the Nursery) so that they could construct tunnels underneath it instead. Meanwhile, Marylebone Cricket Club was given a lease of the surface.
By 1999, two of the three railway tunnels were disused and put up for sale by Railtrack on a 999 year lease. The lease was not, however, bought by MCC, but by the Rifkind Levy Partnership. Rifkind had spotted a development opportunity, but it would not be straightforward. In 2017, after nearly two decades of debate, MCC members voted against collaboration, effectively scuppering any wholesale redevelopment of the land until the expiry of MCC’s lease in 2137.
Enter New Commonwealth who intend to use Blockchain technology to allow the public to purchase (for £500) “a piece of cricket’s most famous ground…. as a gift or simply as a souvenir”.
So what will cricket fans be buying? Not, it should be clear, a physical piece of real estate. They will be investing in a regulated property fund and when an investment threshold is reached these will be “tokenised” and can be bought and sold on an online platform (a physical token will also be provided to fulfil the souvenir part of the offering). Investors are unlikely to have a say over any development proposals when MCC’s lease expires in 2137. It is also questionable whether they will make any return on their investment before then, but the attraction is to own a share in an iconic site.
The news is probably the highest profile example of a concept which has been long anticipated by the more technological players in property industry. At its most basic, Blockchain is a secure digital ledger system which records digital transactions. Each completed transaction is a block which is added to other blocks to create a chain. It’s a technological way of cutting out the traditional middle man between investors and investments.
Blockchain is an unconventional way of raising money, but real estate is a prime candidate for it. The tangible, unique nature of real estate is readily understood by the general public and trophy assets carry premium appeal. It is clear from New Commonwealth’s marketing that they have understood this. Their other investment opportunity is 103 Mount Street in Mayfair, “one of London’s prized assets” which is sold with “bragging rights”. The technology behind Blockchain also offers an efficient way of communicating with investors so if MCC comes back to the table the news can be quickly disseminated.
Parallels can be drawn with schemes set up in the 1970s and 1980s for the sale of “souvenir land”, which were very small plots of land with sentimental or commemorative value. These schemes found a ready market, but (in contrast with the new schemes) would be unworkable where the whole of the property needs to be readily managed and transferred.
However, there is one note of caution. Blockchain is on the FCA’s radar and that of the government. Tighter oversight and regulation is anticipated and it is not clear what form that will take. Despite this, a market for iconic real estate is self-evident and Blockchain may present a real opportunity for sourcing new money to invest in it.
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