The Olympic Village for the London 2012 Games will require greater public financing than previously expected because of the global credit crunch, organisers said yesterday.
The £1bn village to house athletes and officials is the largest individual project of the Olympics development in the east of the city, and was intended to be largely financed by the private sector. Returns on the scheme should be realised when the village's 3,500 homes are sold after the end of the Olympic and Paralympic Games in September 2012.
But recent turmoil in the financial and property markets have hit the ability of developers to raise loans and have forced organisers to consider drawing on contingency funding in the Olympics budget.
"Given the challenging economic environment, we are in ongoing discussions about the level of public investment in the Olympic Village," John Armitt, chairman of the Olympic Delivery Authority (ODA), said, while an ODA spokesman confirmed: "It is possible, given the economic situation, that more public investment may be needed."
The spokesman said the extra money would be within the existing £9.3bn budget for the Games and would be offset by the ODA claiming a greater share of profits from future house sales.
The Australian property group Lend Lease Corp Ltd, the developer for the village, said there had been delays in securing financing, but said it expected a deal to be in place by the end of the year.
"Given current market conditions, it has taken longer than envisaged to secure project debt," it said in a statement.
The ODA had hoped to strike a deal with Lend Lease last December. The ODA had proposed contributing £550m of public money, with £450m coming from Lend Lease and other financing.
A report from the National Audit Office yesterday said preparations for the games faced "formidable" challenges. "Uncertainties over the deal for the village, legacy requirements and policing and security may add cost or compromise the preparations for a successful Games," the public spending watchdog's head, Tim Burr, said.Reuse content