Credit crunch could hit sales of Olympic flats

He says the Olympic Delivery Authority could even fail to achieve the advance "off-plan" sales needed for the troubled £1billion project.

The village will house 17,000 athletes and officials during the 2012 Games before it is converted into 3,300 flats.

Financing of the village has already been hit dif f iculty. Developer LendLease revealed last month that the credit crunch was preventing it from raising its £450 million share of capital.

Mark Clare, chief executive of Barratt Developments, Britain's largest housebuilder, said: "To make this work they will probably need to pre-sell around a third of the flats but in the current market that's impossible.

"I'm not sure anybody's tried to sell so many at one time."

Mr Clare, whose firm lost out in a bid to build the village with French developer Bouygues, told Construction News that only institutional investors would be attracted.

"The ODA can't sell them too much in advance to private buyers because people buy wanting to move in three months' time."

The ODA expects about two thirds of the flats to be sold privately and the remainder used for social housing. East Thames Housing Association and affordable housing developer First Base, which is par t - owned by LendLease, are in talks. The first wave of private buyers are expected to move in during the second half of 2013, once the flats have been fitted with kitchens. The Olympic athletes will eat in communal dining halls.

The ODA has admitted the village will need an injection of public funds due to the reluctance of banks to lend money during the credit crunch.

Cash will also be diverted to the project from a £1billion fund for sharedownership homes in London operated by government agency the Housing Corporation. The ODA has scaled down the village in the face of its funding difficulties, cutting 900 rooms from the original plan for 4,200.

Pressure on space will mean athletes will have to live on average five to an apartment compared with four under the original plans.

Olympics chiefs insist there will still be a room for every athlete and official - even those who have to compete outside London but want to move into the village once their event is over. Competitorsare guaranteed a flat no higher than the eighth floor to avoid them having to traipse up stairs when the lifts are full. Levels eight to 12 will house Games officials and workers.

An ODA spokeswoman said: "We are in discussions over the financing of the Olympic village and expect to finalise this later in the year. Preselling units has always been an option in our plans but no decisions have yet been made on the ratio of units to be sold off-plan." Meanwhile, the media centre to accommodate 20,000 journalists during the Games is also thought to have been hit by the economic downturn.

Under the original financing plan, the developer was to have contributed about half the £400 million cost of the building, comprising eight digital media studios totalling 700,000 sq ft, plus 500,000 sq ft of office space and a car park.

Now it is thought the taxpayer may have to contribute about £350 million.