London 2012 Games village deal seen by year-end

BEIJING Sun Aug 10, 2008 11:04pm EDT

A computer-generated image released by the London 2012 committee shows an aerial view of London's Olympic Park by night. REUTERS/London 2012/Handout

A computer-generated image released by the London 2012 committee shows an aerial view of London's Olympic Park by night.

Credit: Reuters/London 2012/Handout

BEIJING (Reuters) - A delayed deal with Australian property group Lend Lease Corp Ltd (LLC.AX) to build the London 2012 Olympic athletes' village will be completed by the end of the year, Britain's Olympic Minister Tessa Jowell said on Monday.

Construction has already started but the deal has not been sealed due to the recent credit crunch.

The village -- which will cost about $2 billion and will house athletes and officials -- is the largest individual project of the Olympics development in the east of the British capital, and was intended to be largely financed by the private sector.

Returns on the scheme would be realized when the village's 3,500 homes are sold after the Games.

But recent turmoil in financial and property markets has hit the ability of developers to raise loans and forced organizers to consider drawing on contingency funding in the Olympics budget.

"We are in negotiation with Lend Lease and we expect the deal to be signed before the end of this year," Jowell told reporters.

"I think we saw this coming", she said of the property markets crisis. "The contractors have taken precautionary measures, pre-buying concrete, pre-buying steel."

Jowell said problems with the village could not be compared to the budget overruns of the construction firm linked to the newly-built Wembley stadium, whose delivery was delayed.

"The question here is how much debt will be raised from the banks," Jowell said. "Our position to secure the best value for public money is not to talk too much about contract negotiations."

(Editing by Alex Richardson)