Credit crunch hits Olympic Village financing

By Tim Castle

LONDON (Reuters) - The one billion pound Olympic Village for the London 2012 Games will require greater public financing than previously expected because of the global credit crunch, organisers said on Friday.

The village -- to house athletes and officials -- is the single largest project of the Olympics development in the east of the capital, and was intended to be largely financed by the private sector.

Returns on the scheme would be realised when the village's 3,500 homes are sold after the end of the Olympic and Paralympic Games in September 2012.

But recent turmoil in financial and property markets have hit the ability of developers to raise loans and have forced organisers to consider drawing on contingency funding in the Olympics budget.

"Given the challenging economic environment, we are in ongoing discussions about the level of public investment in the Olympic Village," said John Armitt, chairman of the Olympic Delivery Authority (ODA).

"It is possible, given the economic situation, that more public investment may be needed," an ODA spokesman confirmed.

The spokesman said the extra money would be within the existing 9.3 billion pound budget for the Games and would be offset by the ODA claiming a greater share of profits from future house sales.

Australian property group Lend Lease, the selected developer for the village, confirmed on Friday there had been delays in securing financing, but said it expected a deal to be in place by the end of the year.