The lack of interest in development projects in the current economic scenario has caused many of them to be held up until the developers can be sure that they will be well-received by potential tenants once they are completed. In such an instance, Australian developers, Stockland, have put their work on the Scottish Provident building, located in
The MD of the company in the UK, Ken Lindsay, said that the company had anticipated the scarcity of tenants willing to pre-let given the current economy, but this had significant implications for the company’s profitability, leading to its decision to halt work on the Scottish Provident building, which is slated to have space for shared offices, apartments, and retail outlets.
He went on to say that though the company is eager to commence work right away, and they are aware that they cannot expect pre-lets to be secured for the entire complex, financial prudence prevents them from breaking ground before there is at least some level of interest demonstrated in the project.
The usual process followed by developers - seeking interest before commencing work and negotiations with contractors - has been slowed down considerably by the economic downturn, he stated. However, Stockland has shown that it is ready to take up the project the moment it is satisfied about tenant interest. It has had the interiors of the building stripped, to enable contractors to demolish the buildings without any delay once the project gets underway so that the construction of new buildings for the complex can commence.
It is evident that Stockland, though eager and willing, is waiting for the market to signal that the project will give them returns before they decide to invest any more money in it.