Yoo Capital co-founder says collapse of ISG was ‘reality’ following string of global challenges including covid and Ukraine war
The developer behind the overhaul of the Olympia exibition venue has defended low margins for contractors after a series of design changes on the £600m scheme which are believed to have contributed to Laing O’Rourke posting its worst ever set of results.
Yoo Capital co-founder Lloyd Lee said “everyone is under pressure” and administrations of firms such as last week’s collapse of ISG are “the reality of what happens” due to the impact of global events such as the covid pandemic and the Ukraine war.
Olympus Property Holdings, a partnership between Yoo Capital and Deutsche Finance International, appointed Laing O’Rourke on the redevelopment of the Olympia Exhibition Centre in 2021.
The mixed-use scheme, which has a development value of around £1.3bn, has undergone multiple design changes since it was granted planning approval in 2019.
Council records show four amendments to the main application and a further eight amendments to works being carried out by Olympus Property Holdings on surrounding land.
The changes are believed to have been a contributing factor in Laing O’Rourke posting a £288m pre-tax loss in 2023 following disagreements over a price for the job.
The firm, which returned to a slim £18m profit this year, said in its latest accounts that cash management in financial year 2024 was “impacted by significant under-valuations and ongoing negotiations on one major contract, which have now been resolved”, understood to be a reference to the Olympia scheme.
Speaking at the Labour conference in Liverpool, Lee admitted there had been “a few” changes on the project but “actually there hasn’t been that many, and in the end, it’s fine”.
He added: “We’re all getting ready to open, we’re really excited about something which we’re proud to show the world, that this is what we can do as a community.”
>> Also read: Construction industry’s ‘broken economic model’ under scrutiny in wake of ISG collapse
Asked about the impact of low margins on contractors in the wake of the collapse of ISG, Lee said: “All businesses today are under pressure. It’s the reality of what happens when you have a 2008/9/10 event, you end up in a Brexit event, then you end up in a covid event, then you end up in a Ukraine event and the world keeps creating global macroeconomic pressures.
“All businesses are suffering. Everyone’s under pressure, the only thing you can do is push back together as a united force,” he said.
Lee declined to say whether he was in favour of a 5% minimum margin for contractors but said: “I think in the end, all margins are under pressure, ours are under pressure, local businsses are under pressure, local restaurants are struggling… In the end, that’s pervasive across all industries.”
The plans for the Olympia venue include a 1,575-seat theatre, a near 4,500 capacity live music venue, 550,000 sq ft of offices, dozens of new bars and restaurants, four exhibition halls capable of holding 26,000 visitors and two new hotels with a combined room number of 350.
Among the scheme’s amendments submitted to Hammersmith and Fulham council are changes to internal layouts for the music venue, the exhibition hall, a hotel and a 12-storey theatre building.
Public realm has also been altered with an increase in area for retail and access stairs added to the National exhibition venue to allow access to a roof terrace.
The project, which Lee said would begin a “soft opening” in mid-2025 before fulling opening by the end of the year, has been drawn up by Heatherwick Studio and SPPARC while others working on the scheme include QS Gardiner & Theobald.
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