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Credit Crunch Hits City Lofts

Following difficulties caused by the credit crunch and the resulting drying up of financing, developer City Lofts has become one of the largest property firms yet to fall victim to it with the company facing oblivion.

This doesn't however mean that their under construction 101 metre tall tower in Sheffield in St Paul's Place will be placed on hold as it already has financing in place thus most of the scheme is paid for and insulated but the main parent group has now entered administration.

This is partly thanks to the fact that the City Lofts Group has been structured so that the developments are actually done by shell companies with the parent company a marketing figurehead with few actual assets.

Small changes will be made to the actual specifications inside the flats that can add the profits up slightly such as a microwave combination oven being changed for a pure conventional oven but the overall end product will remain the same as previously intended.

Big changes to the building would be a massive legal headache for the developer, not least as they have marketed the apartments partly on the reputation of the architect, Conran & Partners and the quality of the finish.

With approximately two thirds of all the units sold, any significant downgrading in specification could lead to a couple of hundred lawsuits and put residents complaints about previous tall apartment blocks that haven't quite lived up to expectations such as those faced by Beetham to shame.

Apartments meanwhile are still selling in the tower with cannier buyers sensing a good opportunity for a bargain below the list price of each unit.

The experience shows that even if a developer does go out of business, as long as a scheme is underwritten it can be completed thanks to a complex arrangement of companies and financing.

Article Related buildings:

City Lofts St Pauls Tower

City Lofts St Pauls Tower
Under construction yesterday
Under construction yesterday