Centros, the Delancey backed retail developer, has pulled out as developer of a retail scheme in Dumfries, Scotland.
The council had entered into exclusive talks with Centros to work up plans for a 200,000 sq ft development at Whitesands in the town centre of Dumfries.
A Centros spokeswoman said: ‘Although retail demand remains very solid, Centros has confirmed it will not be adding to its current landholdings in the town until the investment market has stabilized and the end value is more certain.’
Viability in question
Richard Wise, chief executive of Centros, said: ‘We will retain our ownerships in Dumfries as we still feel the town offers a good regeneration opportunity for the council, the local community and prospective retailers. However, capital values have moved significantly and until the market settles down, it is difficult to be sure about the scheme viability.’
The council said the decision was ‘extremely disappointing’.
A council statement said a future report to members will address ‘the options for progressing the regeneration scheme’.
Councillor Roger Grant, chair of the council’s planning, housing and environment services committee, said: ‘This is hugely disappointing for the town and the region. This development was exciting and visionary and would have gone a long way to revitalising the town centre.
'Centros Miller has agreed to meet formally with the Council to explain the background and reasons for their decision at the earliest opportunity.’
The decision is the latest retail development that has been hit by a fall in property values.
Centros is also re-negotiating with the council at its Northern Quarter Portsmouth scheme. Centros is asking the council for a reduction of the profit paid to the council due to the change in market conditions. The negotiations between Centros and the council could delay the scheme until 2012.
Last month Standard Life and Shearer Property Group began negotiations with West Berkshire Council to change the contract at its Newbury retail scheme.
While this month Modus has been forced to delay the development of its £230m Friars Walk development in Newport, South Wales, due to the credit crisis and following a funding arrangement which was pulled by one of its banks. It is now searching for an alternative lender.