Liverpool faces a threatening cocktail of factors that may cause its development programme to a derail in the next couple of years, according to Steve Parry, chief executive of Neptune Developments.
Parry, a guest speaker at this week's Liverpool & Manchester Property Forum conference in Liverpool, told the audience that it was not just the credit crunch that was biting. He said: "The city had just got a stage where schemes were stacking up before the recent credit crisis but rents remain among the lowest for a UK city. Coupled with that we have set a high standard of product with what we have achieved in the past few years. It is a real challenge to build that standard in the current market with rents still so low. There is a danger we will fall back to a position where poor grade stock of the lowest common denominator becomes the norm again."
In addition, the long-standing grant regime is disappearing at just the wrong time, Parry said: "Grants are now being diverted [from the North West Development Agency] to support the Government's new housing initiatives and we are seeing the end of Objective One [European funding].
"All this means we could have a situation where the market stalls. The good news is that Capital of Culture has been a tremendous fillip that's actually given Liverpool a lifeboat for this year. Hopefully it can take us into the next year with the same confidence. There has been such an influx of people into the city and truly for the first time there is a sense of vibrancy. There are still deals happening in Liverpool but we need to be thinking about what's going on in 2009 and 2010."
Earlier this week, it emerged a German pension fund is close to buying Neptune's forthcoming 100,000 sq ft office building at Mann Island for around £50m. Neptune is also on site with a major mixed-use scheme including new theatre at New Brighton, and a hotel, casino and conference centre in Southport.