Last year we reported how Barratt, which is developing Dalston Square in a private/public partnership with the authorities, had been credit crunched and was tettering on the brink of insolvency. Its share price had crashed by 90% and its £1.5 billion debt was in the news. Former blue-chip builders like Barratt became relegated to the middle tier as funds flooded out of the sector. But it managed to renegotiate its bank covenants and could "limp along"
Although things picked up slightly in the first quarter of this year, and Barratt's shares rallied, those green shoots have been caught out in the recurrent economic frosts of the credit freeze. Mortgage offers are around only 40% of the boomtime peak and are now falling again. Finance experts are reportedly advising investors to sell this risky housebuilder's shares. These are desperate times with market analyists reporting property prices have not yet reached the bottom. Barratt are now slashing sale prices like there could be no tomorrow.
Can Barratt afford to start building the towerblocks on The Slab, on TfL's railway site next door, which should be ready for development in October?
Will some of the funds allocated in Alistair Darling's budget, to bail out stalled housebuilding schemes, be used to save TfL's Olympic towerblocks which are all intended for private sale?
Hackney Council invested in the £19million shortfall on the loss making Dalston Square scheme. The deal was it would start to recoup when sales went over a certain figure. Will it ever get our money back?