U.S. News

Olympic Village Sold to Qatari Consortium for $906 Million

Vanessa Kortekaas, Financial Times

The  Olympic Village has been sold to a Qatari-backed consortium for 557 million pounds ($906 million), in a deal that sets out the long-term development of one of the key assets of the Olympic Park in east London.

A detailed view of the prototype design of the new golden Olympic torch during its unveiling at St Pancras Station on June 8, 2011 in London, England. 8,000 torchbearers will carry the Olympic Flame around the UK during the 70-day relay, which starts at Land's End in Cornwall on May 19, 2012.
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Delancey, the investment group, and Qatari Diar, the property branch of Qatar’s sovereign wealth fund, purchased 1,439 of the 2,800 homes in the village, six plots of land that offer the potential to construct 2,000 more homes and 10 hectares of parkland. They will work alongside Triathlon Homes, which in 2009 separately paid £268m for 1,379 units which will become affordable housing after the Olympics.

On Friday the consortium said it planned to let out the majority of the 1,400 plus homes – used as athletes’ accommodation during the games – rather than selling them.

The deal means that in total about three-quarters of the £1.1 billion it cost to construct the village will be returned to the public purse. The government was forced to bail out the project two years ago when private sector funding for it dried up amid the credit crisis and ensuing recession.

A slice of future profits from the village development is also earmarked for the public sector. A spokesperson from the Olympic Delivery Authority – the body charged with building the Olympic Park and conducting the sale of the village on behalf of the government – said the government’s share would be “significant amounts of money, in the millions”.

Jeremy Hunt, the culture secretary, described the sale as a “fantastic deal that will give taxpayers a great return and shows how we are securing a legacy from London’s Games”.

The consortium beat rival bids from Hutchison Whampoa, the Hong Kong-listed conglomerate, and the UK medical charity the Wellcome Trust. The trust had also put forward an unsolicited £1 billion offer to take over the freehold of all Olympic Park assets, on the condition that it won the village.

The Financial Times first reported last week that the government rejected the trust’s offer because it said it did not offer taxpayers sufficient value for money. However the government has not ruled out creating a tender to take over the rest of the park’s assets.

Jamie Ritblat, chief executive of Delancey, said the purchase of the village offers “the chance to break the mould and create a sustainable leasing model to provide first-class accommodation for those who see the chance to rent long-term, as the way forward”.

Delancey and Qatari Diar have no deadline to develop the plots of land and a spokesperson from Delancey said they will do so “when the opportunity presents itself based upon demand”.

Mohammed bin Ali Al Hedfa, group chief executive of Qatari Diar, said: “Our commitment to the UK market and to building long-term relationships with our partners and the wider community is of paramount importance to us to ensure that we leave a positive cultural, environmental and sustainable footprint.”

Qatari Diar also owns other assets in the UK, including Chelsea Barracks.

The sale of the Olympic Village is part of a wider scheme to develop the Olympic Park after the 2012 games in line with ministers’ promises to regenerate a deprived area of London.