黑洞社区

The budget for a major refurbishment and extension of a shopping centre in Watford has jumped 48%, just weeks after it emerged contractor Bam walked away from the job after failing to agree a contract value with client Intu.

In half-year results published today, Intu reveals it now expects the revamp of its Watford mall to cost 拢148m, rather than the original budget of 拢100m.

Intu ascribes the jump in project costs to 鈥渃ost inflation鈥� caused by booming demand in the nearby London market and a 鈥渞e-defined鈥� scope for the works, which now includes 鈥渆xisting mall refurbishments and improved ancillary services, such as upgraded car parks鈥�.

The disclosure comes after Bam parted ways with the scheme after completing the pre-construction stage, as part of a two-stage tender for the main job, as revealed by 黑洞社区 earlier this month.

Bam said at the time that 鈥渦ltimately we could not reach agreement with Intu on a sum that reflected an agreed view of the market and the management of risks鈥�.

Despite the rise in costs, Intu said it still expected to make an 鈥渋nitial yield on cost of at least 7 per cent鈥� and added that construction work on the scheme is due to commence in the fourth quarter this year. Intu declined to comment on the tender process for the main contractor role when contacted by 黑洞社区.

Elsewhere, Intu is also planning to start on three other major developments over the next 18 months - Intu Broadmarsh, Intu Lakeside and Intu Costa del Sol - as part of a 拢1.5bn UK investment pipeline for the next ten years to add 2.6 million sq ft of new retail and leisure space. They are also on site at five restaurant and leisure projects costing over 拢100m.

The four new developments scheduled to start in the next two years have anticipated costs of 拢400m for Intu.

The firm did report that shopping centre development remained at 鈥渓ow levels with the majority of activity focused on extensions and reconfigurations鈥� and this plus the changing face of UK retailers and their evolving multi-channel strategies has seen retailers target larger stores in prime locations.

Intu added that the case for deregulation of Sunday trading was 鈥渙verwhelming鈥� as 鈥渋t would generate positive economic activity and create thousands of jobs鈥�.