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Credit crunch could hit sales of Olympic flats
Matthew Beard, Sports News Correspondent22 Jul 2008
Olympic chiefs will struggle to sell flats in the athletes' village during the current property slump, an expert has warned.
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.
Reader views (9)
If the design is accurate - then these 'flats' are just sink estates waiting to happen. Come 2015, they will be covered with graffiti, boarded up, crack dens - and you can bet the govt will demolish them because of 'constructional issues'. 'Lessons will be learned', no one will be 'accountable', no one will resign, and as usual, the poor old UK taxpayer will pick up the tab!
- Gary, wycombe, 23/07/2008 11:14
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I am sure that by 2012 when the homes are ready there will be huge interest in occupying them, especially from athletic asylum seekers and those that will just claim squatters rights to live in them. I say forget the village just set up a tent camp, its only for a couple of weeks, and it will be more fun.
- Mr S.Port, London, 23/07/2008 00:20
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So there's no need to worry; the taxpayer will pick up the tab, just for a change.
This misdirection of funds is like nothing in our history: is there any figure that the government would consider too high a price to pay? It makes the football money circus look quite honourable, for at least football pays its own way. When a sporting activity needs ministerial input, you know that the public basically doesn't give a toss about it: who ever saw a railway lay on a triathlon special?
- Mdj, Leyton, e10 london, 22/07/2008 23:23
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As an agent in Stratford you could currently move a new build flat if it was on casters pointing downhill on the north face of everest.
This is nonsense - what will happen is that 3,300 new flats will drive down values of existing and yet to be built flats in the area creating a sort of luxury ghost town. Then the council and housing associations will be forced to buy them and they will become the social housing for the borough which will force a lot of the rents downwards. Its not going to be a comfortable 10 years for the London property market.
- Stardust, London, 22/07/2008 16:37
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There is no reason to believe that the current credit crunch will hit the sale of flats in 2012-2013. Whilst things are not good at the moment it is highly unlikely that the current housing problems will exist by the time of the London Olympics.
- Andy, London, 22/07/2008 15:59
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Any idiot (or anyone with financial experience) would realise that the current property slump will not have a significant long-term impact on the property market in 2013 - we can't even predict next year's property market! And Ziggy, *yawn*, another sceptic who coincidentally has nothing else to do during the day, when in fact he should reserve judgement until we experience (what will hopefully be) a spectacle Londoners can be proud of. For once.
- Mandeep, Islington, 22/07/2008 14:26
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I think £8Bn is too low -the figure in my mind is £20Bn, excluding incompetence bonuses.
- Jeremiah, London, 22/07/2008 14:01
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dear Ziggie
It is not just Londoners that are paying for this bun fight, it is the rest of the UK that is also footing the bill and I think that the benefits that will accrue to the rest of the UK could be counted on the fingers of a badly mutilated hand. At least in London you will be getting some houses and facilities that you can use. Clearly the calculations based on what the "organisers" consultants (now having pocketed £80+ million) reckoned on the return for the redevelopment are mince. But we cannot have the liebour government and that small prat Coe losing face so they will just pass over the money from, say, the lottery. How this fits in with the recent comments along the lines of "don't ask for a pay rise, we have just promised £30 million to some middle eastern bunch of tossers and there is nothing left". Just cancel son of trident which we do not need and we can save billions of pounds.
- Ron Oliver, Edinburgh Scotland, 22/07/2008 13:54
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I'm opening a book on how much these wretched games will ultimately cost Londoners...how about £8Bn to start?
- Ziggie, Tower Hamlets, 22/07/2008 11:49
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