The financial crisis halted the construction of Nová Karolina in Ostrava

Ostrava - The global financial crisis has significantly impacted the city of Ostrava, where some work on Nová Karolina must be temporarily halted. This area is set to become a new part of the city center. In the first phase of one of the largest urban projects in the Czech Republic, construction will continue only on the administrative building for now. The construction of the shopping center and other buildings has been put on hold indefinitely. This was stated by deputy mayor Lukáš Ženatý (ODS) to journalists today. However, the city is not concerned that the project will fail. The developer competition for the redevelopment of the former coke plant was won by Multi Development.
    "The company's representatives informed us that they are having problems securing funds for the construction of the first phase. The negotiations they have been conducting so far have been interrupted, and their resumption is expected," said Ženatý. He added that Multi Development expects banks to start lending money as soon as the current situation stabilizes. "Whether it will be a month, two, or three, neither they nor we can say," Ženatý stated. The first phase was supposed to be completed in 2010, and the city has not yet discussed possible penalties for breaching the contract with the company's representatives. Ženatý acknowledged that in light of the financial crisis, the city might be more lenient regarding deadline breaches. "It is a healthy project; the problem is just that the banks have tightened their purse strings and do not want to lend," he believes.
    The director of Multi Development for the Czech Republic, Luboš Kočí, stated in a media release that developer companies across Europe are forced to reassess their plans and activities for the near future. "This situation could not avoid developer projects in Ostrava either. The reason is the practically frozen environment of financial markets, which is characterized by the significant passivity of financial institutions and their reluctance to actively commit to project financing," Kočí said, adding that work will be interrupted only for the necessary duration. Construction will continue only on the administrative section of the first phase of Nová Karolina, which the company is working on with Passerinvest Group.
    Kočí had claimed at an October press conference that he was not worried that the current economic crisis would threaten the Nová Karolina project. "I do not think that this will have any impact on this project. The project is secured, we are continuing with it, and I currently have no reason to believe that it would be endangered in any way," Kočí told ČTK at that time.
    In the first phase, estimated at around seven billion crowns, which is expected to be completed in 2010, a retail and entertainment center, a residential building, and an administrative complex will be built. Plans also include the creation of a central square and the renovation of two historic buildings - the Electrocentrale and the Central Office.
    Nová Karolina is to be developed on an area of 32 hectares, making it more than seven times larger than Prague's Wenceslas Square. A total of 97,000 square meters of retail space, 67,000 square meters of office space, and 78,000 square meters designated for residential use are to be created in the area. There will also be 3,500 parking spaces. The entire project is divided into four phases and is expected to be completed by 2016. The total costs are estimated to be around 15 billion crowns. The last buildings of the former coke plant Karolina were demolished 20 years ago, and the site had to be decontaminated for ten years.