2012 site in jeopardy due to credit crunch
Wednesday, September 24, 2008

The global financial crisis is affecting major construction projects, including the London Olympic site.

It wasn't so long ago that Boris Johnson was calling for the Olympic Park to be made ‘truly groundbreaking.' (See TheMoveChannel.com's news article of August 22nd 2008).

Now, the turmoil that the financial markets are in all over the world has worsened the problem of securing funding for the £1.2 billion Olympic Village.

The Lehman Brothers collapse and the bail out of Halifax Bank of Scotland by Lloyds TSB, (all documented in TheMoveChannel.com's news over the past few weeks) has made the funding situation even direr.

Much of London's Olympic budget was built on the assumption that the city would be able to sell off many of the assets after the Games, including the athlete's village, and thereby recoup its capital costs.

This, however, was based on the assumption that property values would rise, and instead, they have fallen more than 10 per cent in the past year alone.

The Olympic Delivery Authority's (ODA) chairman John Armitt, said, "Securing any form of private sector loan is very difficult in current market conditions.

"The reality is that the situation is changing by the day. There was a certain amount of finance available six months ago, less two months ago and the reality is there is even less now," added Mr Armitt.

Originally, Lend Lease had agreed to finance the project, but the current uncertain climate has put this into jeopardy. So far, the ODA has just half of the funding needed to complete the Olympic site, construction of which is planned to start next year.