Snowhill development could be back on track
A prime city centre development site that has sat idle for almost two years after falling victim to the credit crunch could soon be back on track after it emerged that a German fund was on the verge of investing in the scheme.
According to industry sources, the Frankfurt-based Union Investment Group is set to sign a deal with Ballymore to complete the second phase of the Snowhill scheme, which ground to a halt after Anglo Irish Bank pulled its funding as the Irish economy began to falter. Savills, which had been instructed to market the scheme, had been seeking offers of about £135.1m, reflecting a yield of 6.5 per cent.
The first phase of the scheme, which is now let to KPMG and Barclays, was acquired by Commerz Real AG for the German hausInvest europa fund earlier this year for £113 million.
Ballymore has been under pressure to find a new funding partner for the 300,000 sq ft second phase of the development as it attempts to honour a 20-year pre-let it has signed with Birmingham law firm Wragge & Co for 183,599 sq ft. The agreement means the law firm can walk away from the deal if the building is not complete by the beginning of 2013.
The status of a third phase to the scheme, which has planning permission for apartments and a luxury hotel, remains unclear although any residential development in the city looks likely to remain on hold for the forseeable future while Birmingham’s apartment market continues to be depressed.