CONCERNS are growing that Glasgow City Council will be unable to raise up to £100m towards the 2014 Commonwealth Games due to a decline in interest for regeneration projects.
The council is hoping to raise funds from the sale of 56 "surplus sites". But commercial property experts warn that, given the current state of the market, it is unlikely the properties, which include several former schools, will achieve anywhere nea
r the expected sum.
The market has been slowing down and prices falling and few expect a recovery until next spring at the earliest.
There are also mounting fears that the council will not be able to find an appropriate private sector partner for the sales, which it is proposing to carry out through a joint venture.
With many of the major building companies suffering severe financial strain, sources say there is no appetite for the project.
If it fails to get off the ground, sources warn that the council is going to fall short of the £375m cost of the Games. Around 80% is expected to be met by the Scottish Government, with Glasgow City Council providing the rest.
One leading commercial property consultant said: "I'm not sure there is an appetite for the joint venture in the commercial sector. If it doesn't happen, they are short of a fairly serious capital receipt."
Another source said: "Companies that tend to get involved with these joint venture projects rely on banks and debt financing, and that's incredibly hard to get your hands on these days. It doesn't surprise me that they'll experience difficulties."
David Bell, director of the public sector group at CB Richard Ellis, warned that regeneration projects are always the first to fall by the wayside during economic downturns due to the higher risks involved. "They are now really quite peripheral in this market," he said.
A spokeswoman for Glasgow City Council said the process of finding a joint venture partner is "still ongoing". She added that the money raised through the sales will go towards supporting "a number of the council's priorities", including the Commonwealth Games, but a specific proportion of the £100m has not been earmarked for the sporting event in 2014.
The deadline for proposals was March 14. It is understood the council wants to transfer all 56 surplus sites to the new joint venture by the end of the current financial year.
The news comes just a few weeks after Lend Lease, the Australian developer working on the £1bn Olympic Village in London, admitted it has so far not been able to raise the £450m it needs to fund the site in Stratford.
Lenders are increasingly reluctant to back the project because they fear falling property prices could lead to them not regaining all of their money.
