'Uncertainty will hit city's property hopes'

11:44am Saturday 10th May 2008

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Two of the city's biggest developers have warned that the economic climate will have a chilling effect on Bradford's regeneration.

The uncertain market, fuelled by high interest rates on construction loans, will usher in a period of caution among those looking to carry out large city centre schemes.

Developers say the high interest rates, heavily influenced by the London Interbank Offered Rate (Libor), are a factor because many in the building industry borrow using floating-rate debt linked to Libor.

Russell Baker, managing director of Asquith Properties, said: "Banks are very wary of lending money for any large city centre schemes, because it's a very risky business at the moment."

The cost of borrowing for developers has increased by 1.5 per cent according to Mr Baker, whose company carried out the Gatehaus scheme, in Leeds Road, and is looking to start work next year on the Citygate project, in Manchester Road.

He said: "Sale values have dropped and valuers are being given notice to undervalue by 20 per cent minimum. We are going to have to be more pragmatic about where the market is. I would be interested to see anyone start a major city centre scheme in the current climate. I don't think anything fundamental is going to happen for 12 months. The game is up for the next year because investor confidence is not there."

Harold Robinson, chairman of Magellan Properties, a partner in the Bradford Channel project, said his company was keeping a close eye on conditions but still planned to press ahead with the £450m scheme near Forster Square.

He said Bradford Channel Limited hoped to secure reserved matters planning permission for phase one of the project within the next few months and was looking to start work early next year - a move he said would boost confidence in Bradford.

Mr Robinson, also the founder of Bradford Property Forum, said: "Schemes have got to be realistic in the light of the market conditions. Everyone accepts that that's the case.

"It's a much more challenging time for regeneration. But companies like BCR and Yorkshire Forward, which have a regeneration remit, should come into their own in difficult times because they should be the catalyst to regeneration."

Maud Marshall, chief executive of Bradford Centre Regeneration, said: "I have no doubt that the current economic climate will have an impact on developers, as the banks are cautious about lending money.

"However, Bradford is a comparatively safe market compared to other cities, which are potentially exposed due to the over-development of office and residential properties.

"The potential that exists in Bradford, which is still in the early stages of regenerating itself, is not something that will disappear."

Mrs Marshall said Bradford had witnessed commitment from some of the world's largest developers. She said: "This is a macro-economic issue affecting cities and towns across the globe, not just Bradford, and I believe we are well placed to weather the storm."

Councillor Andrew Mall-inson, Bradford Council's executive member for regeneration, said: "It's a time for concern at a period when we are on the crest of some significant projects - Westfield being one of them. Because of the position Bradford is in, with lower land values and a better planning system in place, we can still deliver projects at a pace and cost that other cities can't match."

e-mail: will.kilner@telegraphandargus.co.uk

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