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A deathly hush has fallen over the Pan Peninsula. Until recently it was one of the noisiest areas of the property boom. Now the only clamour is the sound of buyers stampeding for the exit.

Few places in London characterise so completely the gloom that has overtaken the recent exuberance of the property market, and for good reason. The development, which broke all records for apartment prices in Docklands, was a product of the off-plan phenomenon. It attracted speculators in droves. They saw an opportunity to buy at a discount before even a brick was laid and dashed to place deposits. Now the rush is in the opposite direction.

It's happening all over London. Buyers are walking away from deposits rather than completing on properties now worth far less than they agreed to pay for them. In many cases, even if they wanted to complete the deal they can't, because mortgage funds have dried up. This is the unseen side of the property crash and its full effects are yet to be felt.

The Pan Peninsula project is due to be completed early next spring, ahead of schedule. For months, a sign has hung outside the towers boasting that all flats are sold. The sign is a relic of better times. One property website alone currently has almost 100 advertisements selling flats in the development. Many are being sold by investors hoping to recoup what they have spent on deposits. In some cases, the sums are over £100,000 and hopes of recovering anything like this amount are fading fast.

The man behind Pan Peninsula is Sean Mulryan, one of Ireland's richest tycoons. A stonemason by trade, he named his company, Ballymore, after the town in Co Kildare where he started his building firm in 1982. In 10 years, he had moved to London and Ballymore is now one of the major developers in ­Britain and Europe, with a property portfolio valued in excess of £1 billion.

Mulryan is among the most successful of the ­current generation of Celtic tigers. Like his contemporaries John Magnier and ­JP McManus, he has an impressive string of racehorses and has invested in English football, taking a stake in Sunderland FC.

When he launched the Pan Peninsula development three years ago, there was intense interest, especially among property professionals. Ballymore's daring new towers, one standing 50 ­storeys tall at 489ft, the other a little lower, were not just the highest of high-rises, they also promised to be the best.

Every apartment, from studios to the penthouse, was designed with floor-to-ceiling windows. The views from the riverside blocks were exceptional, with a glimpse of the sea possible from the upper floors. The fitting-out was exceptional, with high-quality kitchens and bathrooms.

Even more impressive was the marketing. Pan Peninsula was sold not just as a place to live, but as a way to live. Residents of the 762 apartments were promised a "signature" restaurant, a health club and spa, a ­private cinema and a cocktail lounge on the 50th floor.

They were also offered an entrée to the Quintessential concierge group which links its clientele to the world's most exclusive and expensive shops and services.

Docklands property prices have always lagged behind London's more established areas such as Chelsea and Mayfair but the two towers helped the area stage a quantum leap. The £1,000 a square foot barrier was broken for the first time in sales at Pan Peninsula. Just before Christmas 2006, Ballymore announced it had sold the penthouse for £7 million, believed to be a record for east London.

Mock-ups of the apartments were ­created on a barge floating on the Thames close to the rising towers. Plans of the development were on display and purchasers were able to choose their flat from those that remained. In those early days, studios were selling for around £299,000, one-bed flats cost around £400,000 and larger ones clustered around £700,000 and above.

At the time, London property prices were rising at a giddy rate. Some ­estimates suggested gains of 20 per cent a year. Buying off-plan at a place like Pan Peninsula seemed a one-way bet. Soon the website carried a notice advising everything had been sold. The marketing suite number was disconnected.

For those who had bought in, by placing a 10 per cent deposit, it seemed all they had to do was wait for prices to rise sufficiently and then "flip" the property by selling the option for a profit. Some did. Pan Peninsula attracted investors from the City and Canary Wharf, most of whom were financially astute.

It was estimated that 65 per cent of those buying off-plan were single men looking for an investment. Around 20 per cent were single women professionals keen to acquire a smart Docklands home. There was an unconfirmed report that 50 per cent of the purchasers of the flats in the second tower, located to the west of the site, were Irish investors.

In the City bonus frenzy of early 2007, money poured into Ballymore. The company planned another huge tower, this time at Piccadilly, Manchester. That project has now been shelved.
As a development, the future of Pan Peninsula is assured. Work is said to be several months ahead of schedule and the towers appear to be almost finished. But as an investment, the immediate future is far less rosy. A local estate agent revealed that a client bought a one-bedroom flat two years ago, off-plan, for £420,000. So far he has paid two deposits totalling 20 per cent of the price, just over £80,000. Now the flat is thought to be worth only £375,000. He is trying to sell for that price. If he can sell, it will limit his loss to £45,000. If he cannot, he faces losing his deposit of more than £80,000.

"He has to make a decision," the agent said. "Does he complete and wait for the value to go up, or does he walk away, sacrificing his deposit? Our advice is to go through with the deal and rent out."

This was the advice being given by Foxtons, who are trying to sell nine flats in the development. If possible, a spokeswoman said, it was better to complete and rent out until values recovered.
Not everyone can afford this option. A Russian investor who is trying to sell two flats privately at Pan Peninsula said the downturn had thrown his investment plans into chaos.

"I bought two two-bedroom apartments, one quite large for £770,000. Now I'm trying to get £775,000 for it but it's not looking good. To be honest, I'm very disappointed. I can't afford to wait for the market to recover. From what I can see now people are not buying because they think the market still has some way to go before it bottoms out. I just don't know how much I'll lose. My strategy now is to try to get buyers in Russia or perhaps Kazakhstan. If the worst came to the worst, I suppose I could live there."

The off-plan phenomenon was more a feature of the recent property boom than any other. The incentive for buyers, in a decade when prices trebled, was huge. Between reservation, exchange and completion, properties were soaring in value. Speculators had no intention of moving in. Hundreds of thousands of pounds were to be made without so much as lifting a tea chest.

The idea also spawned much-criticised "investment clubs", which persuaded people of limited means to invest in unbuilt property on the understanding that they would profit from big price rises before they needed to pay up.

In a block of flats near Victoria, two-bed flats were available off-plan for £650,000 in October 2006. At the time of their completion, a year later, local agents were quoting £950,000 with a waiting list. Now owners looking to sell are receiving offers no higher than the £650,000 they paid.

At Arsenal's old stadium in Highbury, now a 700-unit residential development, off-plan buyers have been walking away from their deposits. As the Evening Standard revealed last week, a large number of those who paid 10 or 20 per cent deposits have seen their £500,000 flats plummet in value to around £400,000. Buyers have lost interest and investment clubs have all but disappeared.

Ballymore declined to give details of how the Pan Peninsula development is working out. A spokeswoman said the company was "comfortable" with progress and interest remains high. It was, she added, "virtually sold out".

Workmen are finishing off the health club and cocktail lounge. Whatever the market does, the view from this 50-storey eyrie will be undiminished, even if some residents find themselves sipping their caipirinhas through gritted teeth.