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£400m Olympic Village subsidy

LONDON’S Olympic planners face a new bill of up to £400m over the construction of the athletes’ village.

The Olympic village, the biggest construction contract for the Games, was originally to be built by a private company at a cost of £1 billion and then converted into 5,000 homes that would be sold after the event. The cost of the village is not included in the budget of the Olympic Delivery Authority (ODA), which is overseeing all construction work.

However, London and Continental Railways (LCR), which owns the site at Stratford, east London, and its development partner are expected to demand a subsidy of up to £300m to cover any profits they fail to make from the sale of the apartments.

“In usual circumstances you would release new-builds onto the market in small chunks in order to keep the price up,” said an insider. “But in this case you are talking about 5,000 units hitting the market at the same time and there needs to be some way of subsidising the loss of profit that creates.”

LCR and the developers of the Olympic village are also expected to demand up to £100m in rent during the Games and to cover the cost of adapting the properties into flats once athletes have left.

A consortium led by Lend Lease, the Australian developer that built the Bluewater shopping centre in Kent, is likely to be awarded the £4 billion Stratford City contract by LCR and the ODA as early as this week.

Lend Lease, which built the athletes’ village at the Sydney Games in 2000, was run by David Higgins, chief executive of the ODA, although he no longer has any financial interest in its activities.

From: Olympic village to cost £400m, Ian Pocock and Dipesh Gadher, The Sunday Times, 19 11 06

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