A £150 million project to transform Birmingham’s Irish Quarter has collapsed – becoming the latest scheme to see the rug pulled from underneath it by a government-backed bank.
Connaught Square was supposed to turn a patch of rubble-strewn wasteland opposite Digbeth Coach Station into a mixed-use site with 658 new apartments, a four-star hotel with sky bar and a new Irish Centre, shops, restaurants and a spa.
But now Connaught Square Ltd, the subsidiary of the Irish-owned Naus Group set up to deliver the ambitious plans, has gone into administration and the scheme’s future is in jeopardy.
It is understood the move comes as a result of a funding decision by Allied Irish Bank, the project’s backer, which had to be bailed out by the Irish government who have taken an 18.3 per cent stake in the bank.
Connaught Square is now in the hands of insolvency firm Begbies Traynor.
Joint administrator Neil Mather said he would be trying to garner interest in the site from the property world.
“This is an historic site just off the city centre and represents a major opportunity for the right developer,” he said.
“We are keenly aware that this is a very important location in terms of Birmingham’s ongoing redevelopment and will be looking to expedite matters as rapidly as practicable.”
The collapse of the 4.5-acre Connaught Square scheme is reminiscent of other high-profile Birmingham building projects to have failed recently due to decisions at government-backed banks.
A similar tale unfolded at The Cube – the latest striking addition to Birmingham’s skyline – when its developers went under weeks before completion after failing to reach a financing agreement with Lloyds Banking Group.
And over on the other side of the city centre, Ballymore’s flagship Snowhill scheme was forced to call a halt to the second and third planned buildings after the original backer, the now-nationalised Anglo Irish Bank, fell victim to the credit crunch and reduced its exposure to the commercial property market.
The move has left a scar on the city’s skyline, leaving two unsightly concrete cores on show for the last two years – but Ballymore is now seeking new funders to complete the scheme.
Despite the administration of Connaught Square, the chief executive of Naus Group said he believed the scheme – which has since been renamed Rivercross – could still be partly built if a new backer was found.
Ronan Mellett, who runs the Dublin-based developer, said: “We believe the scheme is still viable and that phase one, which comprises the hotel and 128 apartments, should still be fundable in the current climate.
“The difficulty over the last 12 to 18 months has been in securing development finance.
“We will be working with the administrators to secure funding with a view to getting the scheme into development in the near future.”
The initial plans for Connaught Square were given the green light in 2007, and would have represented a major transformation of the run-down part of Digbeth.
As well as flats and a hotel, the scheme had plans for a pedestrian boulevard providing access to two new public squares.
It was widely celebrated for its promise to bring Birmingham’s “hidden river” – the River Rea – back up to surface level in Digbeth.