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London 2012: infrastructure legacy or a costly waste?

When London won the Olympics, it was booming. The GFC changed everything. In 2008, Tessa Jowell, minister for the Olympics, said: “Had we known what we know now, would we have bid for the Olympics? Almost…

Olympics are sold on the benefits their infrastructure will bring, but sometimes reality doesn’t match the promise. CmdrCord

When London won the Olympics, it was booming. The GFC changed everything. In 2008, Tessa Jowell, minister for the Olympics, said: “Had we known what we know now, would we have bid for the Olympics? Almost certainly not.”

In 2004 the cost of hosting the London Olympics was estimated at £2.75 billion. The cost of the subsequently downscaled event has reportedly escalated to between £11 billion and £13 billion.

Although the British Government is underwriting investment in Olympic infrastructure, much of the anticipated private sector interest evaporated in the wake of the financial crisis.

Because the Olympics are profitable for the International Olympics Committee and not for the host city and country - a view that is occasionally debated - the rationale for seeking to host the Olympics and for the commitment of public resources generally focuses on the Olympics intangible “legacy”.

Would it have been built anyway?

The legacy of the 2012 Olympics is its contribution to the existing regeneration strategy for the Lower Lea Valley. The Lower Lea Valley was once a major manufacturing centre and subsequently became a largely abandoned, occasionally toxic, industrial area. Some of the residential areas have been described as among the UK’s most “deprived”, and new jobs for residents are central to the regeneration strategy.

If you’re going to the Olympics, you’ll probably go to the Stratford City Westfield. EG Focus/Flickr

The Olympics' legacy largely arises from infrastructure investment. Interpreting the actual economic contribution of Olympics infrastructure requires differentiating between investment programs:

  • Projects that would have occurred regardless of the Olympics, such as the publicly-subsidised private consortium and the London and Continental Railways high-speed rail link. One cost estimate for hosting the Olympics, £24 billion, included transport infrastructure. Including such projects is more a measure of the writer’s antipathy to mega events than a commitment to facts (allowing that in the case of the Olympics facts are in short supply).

  • Projects that were brought forward in time for the Olympics, such as Westfield Stratford City - Europe’s largest shopping centre. It is estimated that up to 70% of persons attending the Games will pass through Westfield Stratford City shopping centre. The move by Australian company Westfield to expedite the completion of the centre is hence one that is easily explained.

  • Infrastructure developments that were postponed, including the Crossrail Project, a major east-west rail link. The postponement of the east-west rail link points to the phenomenon of displacement. The Olympics may generate infrastructure investment but it diverts resources from other projects and from other parts of the country. Displacement is also often the case for tourism during mega events. For example, during the Sydney Olympics tourism in NSW declined.

  • Facilities that were necessary for the Olympics, including the Olympic Stadium and Village, Aquatic Centre, Velodrome and the Media Centre.

Does anyone want to move in?

Looking at the Olympics infrastructure legacy raises many questions: who paid for the projects? Have public projects been (or will they be) sold to the private sector? Were they sold at a profit or loss? And will Olympics venues owned by the London Legacy Development Corporation find tenants that will stimulate the local economy?

The largest Olympic project intended for private investment was the Olympics Village. After the Games it will be renamed the East Village. The Village is a £1 billion investment that in its downscaled form will provide 1,400 affordable, publicly-subsidised flats and 1,400 private flats.

No one wanted to move in to the Berlin Olympics village. Dana Liparova

Lend Lease, the intended Australian developer, withdrew from the project after the GFC. In 2011 the project was sold at a £275m loss to Qatari Diar (a property company of the Qatari royal family), UK developer Delancey and Triathlon Homes - a company that will manage affordable housing in the Village. The government called this “a fantastic deal that will give taxpayers a great return and show how we are securing a legacy from London’s Games”.

The vision for the Media Centre was that its tenants would be, for example, Google or Cisco, and that the centre would contribute to the East London Tech City technology hub. However, prominent tenants have not been forthcoming and there is the fear that the Media Centre will become a “white elephant”.

The most obvious question regarding the post-Olympics future concerns the Olympic Stadium. Unlike many other stadiums built for mega events, the Olympic Stadium benefits from a number of potential tenants, including Premier League football team West Ham United. The success of the stadium is critical to the legacy success of the Olympic Games.

Home to hundreds: the athletes village will become housing. London 2012

Parks for people … or not

The Olympic Park, after the Games, is to be renamed the Queen Elizabeth Olympic Park. Most of the Olympic venues are located in South Park, which will become an urban park, with playgrounds, “flowering meadows” and walkways.

Across the restored Lea River, the North Park “is more about ecology [and] a wilder landscape”. The vision is of a park that will attract local users and visitors. This is a more hopeful future than other recent Olympic Parks.

For example, visiting the Sydney Olympic Park late on a warm and sunny Sunday afternoon, I saw no one. There was nothing to do and fearing that whoever I saw I would not want to see, I left.