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Credit Crunch, London, United Kingdom

Monday 23 Jun 2008
 

Credit Crunch threatens Olympic 2012 construction

 
 
 
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Editorial

Latest victims in the tightening economy include London’s Olympic village and riverside development, Silvertown Quays 

Effects of the Credit Crunch have been painfully visible this week in the UK capital, firstly with the shocking revelation that a developer in charge of the creation of London’s Olympic Village cannot raise the money needed to contribute their share and secondly with the announcement that Silvertown Quay developments have halted. Terry Farrell’s £80million Biota! Aquarium which is situated in the upcoming district has been postponed as funding is no longer available following a near stand-still with home sales.

Already a year behind schedule, Biota! was due to form the centre-piece for the £1.5billion Silvertown Quay mixed use regeneration that developers hoped to “change the face of the Royal Docks and East London” but it has now been officially postponed for a year and this may be extended in the worsening economic climate. Silvertown Quay is overseen by the Olympic Delivery Authority as part of a city-wide regeneration in the run-up to the Olympics and is due to provide housing, schools and retail outlets.

Most critical for London, and indeed the UK, is the 2012 Olympic development, consisting of various stadiums, permanent and temporary, and of the Olympic Village which is to house 17,000 athletes and be converted into saleable homes after the games. Following an embarrassing and poignant admission by Australian developers Lend Lease that they have not raised the funds necessary for the development the Olympic Delivery Authority has stepped in offering £200 million of tax-payers money to ensure the building can proceed. It is feared that this will not be the only payout and the British public may pick up the entire £1billion tab.

John Armitt, chairman of the ODA, said: “The Government will have to come in and support the village - that is understood. But negotiations are going on at the moment to try and minimise the degree to which further Government funding to support the village is required.”

On the tenth of this month research from the Royal Institution of Chartered Surveyors (Rics) showed that transaction levels are at their lowest since 1978 which means that there is simply not enough money to go around. The ODA were today affecting damage control and encouraging high-spirits with a release advising of the award of highways maintenance and control team to Fitzpatrick Contractors. But this week’s revelations can only be seen as a grim realisation of the shadow that is forming over the construction industry.

Niki May Young
News Editor

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