Games officials keen to trumpet benefits of a lasting legacy

PUBLISHED : Monday, 07 May, 2012, 12:00am
UPDATED : Monday, 07 May, 2012, 12:00am


With Britain technically in a double-dip recession, officials are hoping that the summer Olympic Games will pave the streets in gold or perhaps some well-deserved silver. It will be the third time that London will host the global show so, with some luck and a great deal of planning, Team GB can expect the tills to ring before, during and after the event.

But with less than 100 days to go, officials are racing around shouting out countless numbers in an effort to convince the public and Londoners, in particular, that the days of sporting excellence will bring prestige and cash as a lasting legacy.

The Games have cost about GBP9.3billion (HK$117.3 billion) to construct and host, with 98 per cent of contracts going to British companies. Fans have already spent GBP300 million on tickets and this alone, analysts say, represents a guaranteed boost to economic growth of 0.1 per cent.

The city is expecting more than 500,000 overseas visitors, who will hopefully spend over US$1 billion. The main site for the Games is in the east of the city where, in addition to the Olympic Village and venues, more than 3,000 new homes with a value of more than GBP120 million have been built.

As part of a GBP20 billion transport overhaul there are nine new railway lines including the Javelin high speed train which will be whizzing around the capital at 225km/h.

And when all those visitors need to refuel, some of the 40,000 new jobs created will be at the nearest fast-food outlet, where staff will fry 180,000 portions of chips and flip 50,000 burgers.

Hosting the Olympics used to be a bit of a game of chance in money terms.

Back in 1976, Montreal won the Games and lost a lot of money - more than US$1 billion even then - which took 31 years to pay off.

But the Canadians funded the show almost entirely through public funds, and in 1984 Los Angeles ripped up the rule book and became a blueprint of the modern commercial Games. The city turned a profit thanks to sponsorship, private investment and careful planning.

Athens apart, all the other summer Olympics since have either made money or at least broken even, according to a PricewaterhouseCoopers report.

The problem is that many of the Olympic sites needed the Games as much as the Games needed them. For example, Barcelona which, although it only made a profit of US$3 million, used the Games to completely rejuvenate an area of inner city blight.

That's not the case for London, where property prices continue to buck the national trend and power ahead. According to the leading housing relocation company, Rightmove, asking prices in the capital rose 2.9 per cent in March, that's up 14.9 per cent since 2008, while in the rest of the country prices have fallen 4.3 per cent.

So what about the rental sector?

The leading letting agent, WA Ellis, says it is receiving inquiries 'in droves' about lettings in the capital during the Olympics, but 90 per cent of those inquiries are from landlords seeing if they can cash in.

Senior partner Lucy Morton says: 'There is very little demand from tenants. We have noticed over the past 12 months an increase in demand and interest from Chinese investors but not specifically due to the Olympics. Chinese investors are looking at London as a long-term investment with good capital appreciation.'

There are rumours of landlords moving out tenants to make way for well-heeled visitors and trying to impose premium rents, but they remain that, rumours.

Morton says: 'The major drawback to increasing rents during the Olympics is the void period running up to the let and more importantly, following the let. My worry was that there would be a glut of properties to let in September when investors revert back to long lets but, to be honest, because of the lack of demand, investors have carried on with their long lets rather than breaking them for a short-term gain.'

Top drawer London agent Fitz-Gibbon, which is running seminars and has an online advice centre for potential renters, believes that while the Olympics might be fun, the London economy doesn't need cheering up.

Founding director Susan Fitz-Gibbon says: 'While it may be a great idea that the Olympics may have an impact on rental prices, the reality is that the Olympics will not have an ongoing effect - indeed it does not need to.

'The market is busy enough anyway with rental demand increasing at all levels. From the first-time buyers who cannot afford to buy, to the relocating corporate tenants and those people making lifestyle decisions and choosing to rent rather than buy.

'Those renting are continuing to do so and we are not witnessing any let-up to this.'