Spitalfields homes scheme to begin within six weeks: Residential project may restore Costain's fortunes

WORK will begin within six weeks on the first stage of a planned redevelopment of the 13-acre Spitalfields site in the City of London, the former fruit and vegetable market.

The development of 160 town houses and flats that will occupy the northern portion of the site, is another indication of the improving fortunes of the housing market in the south of England, where house builders are bidding up the price of land in anticipation of rising house prices.

The rest of the site will remain mothballed until tenant demand - which remains weak despite the strength of the property investment market - recovers sufficiently to make a combined retail and office scheme viable.

Spitalfields Holdings, a company jointly owned by two construction companies, Costain and Balfour Beatty, and LET, the property developer, is choosing a joint venture partner from a short list of three housebuilders.

Once the partner is chosen work is expected to be started immediately on the scheme, which is planned to challenge the Barbican's monopoly on prestigious City of London housing.

Despite the fact that Spitalfields is not expected to assume any of the project risk, merely supplying the land, the proposed scheme is likely to put the spotlight on the carrying value of the site in its shareholders' balance sheets. According to Costain's 1992 accounts, the construction company's one-third share of the site is valued at pounds 62.6m, implying a total worth of pounds 188m.

Analysts have repeatedly questioned the valuation of the land, which assumes the completion of 900,000 sq ft of office space and 300,000 sq ft of retail and residential units.

The scheme is scheduled to be developed in phases as market conditions allow with a projected completion date of 2001.

The development marks a change in fortunes for Costain, which has been the hardest pressed of the scheme's investors.

Spitalfields is the last remnant of a diversification in the 1980s that saw it expand into house building and property development but ended in an ignominious rescue rights issue last September supported by only 28 per cent of its shareholders.

The group's fast growth as the market peaked in the late 1980s pushed it into trouble after those markets turned down after the boom.

Stubbornly high borrowings forced it to abandon all but its core operations.

Having pulled out of property in 1991, Costain sold its housebuilding operation last year to Redrow, the builder planning a flotation in the spring, and sold its profitable Australian coal mining business to Hanson.

Last week Peter Costain, chief executive, denied market rumours that the remaining US coal mining operations were to be sold to Hanson.

However, Mr Costain admitted the logic of merging the business with that of Peabody, Hanson's mining subsidiary.

The West End is starting to show signs of a shortage of office accommodation, writes Gail Counsell.

Development availability fell by 30 per cent in 1993 while take-up rose 29 per cent to 4.1 million sq ft, its highest annual total since 1988, according to the surveyors Richard Ellis.

A steadier market has helped to stabilise rent levels and has produced increasing investor interest, with activity at its highest for more than three years and yields falling sharply, they say.

Average top rental values for Mayfair and St James's are now stable at about pounds 40 a square foot while Covent Garden, the Strand, Victoria and Belgravia fell by about pounds 2.50 to around pounds 25 a square foot.

The surveyors agree that tenants are able to obtain rent-free periods and other concessions which reduce the cost, but say that market sentiment by the end of the year was that these were in decline.

Start your day with The Independent, sign up for daily news emails
Danny Cipriani of England breaks clear to score his second try
Life and Style
New research says leaving your desk can help you to avoid serious illness
Arts and Entertainment
tvSPOILER ALERT: Like a mash-up of 28 Days Later, Braveheart, The Killing and Lord of the Rings, this GoT episode was a belter
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral