“Waterfront project heading for £74 million loss”

Wednesday 04 March 2015

The Waterfront development will end up costing the taxpayer £74 million and no private sector developer would touch it with a bargepole, according to a new assessment of the scheme.

The claim has been made by rival developers Dandara, who say that their feasibility study of the Jersey International Finance Centre shows that there is no prospect of the £50 million profit that the States of Jersey Development Company say the scheme will raise.

Instead, they say that the taxpayer will be left on the hook for a loss of £74 million – meaning that their assessment and the SOJDC’s differ by around £124 million.

And they say that projections including the secret McKinsey report appear to show that Jersey could lose 4,500 jobs between now and 2020 if no new businesses are attracted to the Island.

The claims have been made in an explosive submission to a Scrutiny review of the plans to develop the Esplanade site by the developers, who have developed a habit of building office blocks and filling them with the same major finance firms targeted by the SOJDC such as RBC, PwC and KPMG while the States-owned developer drags its feet.

The report says: “It is Dandara’s view that the proposed development actually represents a huge risk (in financial terms) to the public good.

“It will not be a financial success and accordingly far from making a material contribution to the finances of Jersey of £50 million or more as has been indicated will incur material financial loss estimated by Dandara at £74 million and moreover deprives the public good of any other more beneficial use of the land.

“A private sector developer for a scheme of this size and risk would require circa £30 million profit, being 15% of the sale value. The feasibility shows unequivocally that the proposed development would not be attempted by any developer in the private sector.”

The report also estimates that all of the demand for grade A office space over the coming years could be met by Dandara themselves – they say that there’s 168,000 sq ft of office space demand, and that they have 161,000 sq ft under construction, and are about to start a new as-yet-unrevealed project in September for another 70,000 sq ft.

Although trees and bushes were removed from the site, apparently to make way for construction work, earlier this year, it’s still not entirely clear when it will be built. When it was relaunched in late 2011, the estimates were that work would start in early 2013. Last January, the date was given as April/May time this year, but by April the date had been brought forward to October, but the most recent estimate was May/June this year. The development's official website still gives a start date of early 2014.