Will this vision ever be a reality?
Serious concerns have been raised over the future of a £500m redevelopment of Portsmouth city centre. A secret report leaked to The News reveals huge worries over the funding of the Northern Quarter project.
Fears over the credit crunch mean investors are too nervous to stump up the cash for the shopping complex, which will be built partly on the site of the old Tricorn building.
On top of this The News can reveal:
* No major cinema chain or four-star hotel will sign up to the project
* No builder has been appointed ahead of this August's start date
* No major shops apart from John Lewis and Marks & Spencer have put their names to the scheme
* The project will barely break even.
Predictions show that the developer Centros won't even earn 5m out of the scheme – well below the estimated 150m.
Shareholders are worried at the thought of paltry returns, considering Centros has already stumped up 40m and reported a loss of 2.9m in the residential build phase because of an increase in construction costs.
In the secret report, John Marsh, development director at Centros, said: 'At this stage our shareholders are being asked to contemplate investing 500m to generate a profit marginally above break even.
'This is something they will not do.'
Paul Ellis, from the city council's property consultants DTZ, which compiled the secret report, also warned councillors: 'Clearly if developers don't consider there is a sensible level of return for the monies needing to be invested then they won't proceed.'
In a bid to help things along, city councillors last week met behind closed doors and agreed to make changes to the project.
They unanimously agreed to accept a smaller cut of Northern Quarter profits to keep investors happy, including less share in the rent paid by retailers who lease shops and letting Centros set its own costs for customer parking.
Despite the concerns in the report, the city council and Centros have played down the problems and said the Northern Quarter – which will include 80 shops, restaurants and cafes – will be completed by 2012.
Centros said that as now it is owned by Delancey – one of the leading investors in UK property – funding for the Northern Quarter was 'simply not an issue'.
And it said it expected to appoint a contractor in the coming months with the aim of work starting on site later this year.
Council leader Gerald Vernon-Jackson said strong competition among cinemas locally meant it was hard to find an operator for the Northern Quarter.
'One of the problems is the cinema in Gunwharf Quays is much more successful than anyone expected – it is the fourth busiest in the UK,' he said.
'Other cinema operators are concerned about competing with that.'
He added: 'I am very supportive of the scheme and encouraged that our advisers are being so optimistic about it.
'We have had to look at the bigger picture here but it's all about achieving a huge scheme in Portsmouth which is very important.'
The News can also reveal that there is no binding legal agreement between the council and Centros until full planning permission is obtained later this year.Although Portsmouth and South Hampshire Chamber of Commerce said it was very disappointed about losing out on the prospect of a four-star hotel, its chief executive said she was not surprised the scheme had hit so many obstacles.
Maureen Frost said: 'It is not altogether surprising given the current economic climate, particularly in the retail sector.
'I think it is particularly important that this development goes ahead – the council was right to give Centros the flexibility it needs.'
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Weather for Portsmouth
Friday 25 May 2012
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Temperature: 13 C to 25 C
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