£700m of work shelved as market jitters hit developers

Two major schemes worth more than £700m have been put on hold as market jitters continue to hit developers.

Work on the £500m Northern Quarter shopping centre in Portsmouth has been suspended. And the £220m Piccadilly Tower in Manchester - the tallest residential building in the UK outside London - has also ground to a halt.

Centros is developing the Northern Quarter on the site of the notorious Tricorn Shopping Centre.

Retail giant John Lewis has already agreed to become an anchor tenant on the site which was due for completion in 2011. But work has now been stopped following fears that more than 200 apartments which form part of the one million sq ft mixed-use scheme would struggle to sell.

A source close to the project said: "The professional team has been stood down and the work put on hold because of worries about the current market. A lot of profit was locked into the residential element and it doesn't look as lucrative in the current climate."

Similar fears have stalled Ballymore's planned 58-storey Piccadilly Tower in Manchester which would be even higher than the city's Beetham Tower.

Birse Civils has been on site since January, building a contiguous wall, while Bachy Soletanche performs piling works.

But sources close to the 43-apartment development believe Ballymore is getting cold feet because Manchester's residential property market has seized up.

One local source said: "The housing market has totally come off the boil and it looks like being a victim of that. Piling work has been carried out down there but nothing else seems to be happening.

"It looks like the job has stalled because the developer is struggling to sell the flats off-plan. A year or so ago, they would have been snapped-up by investors but it's a different market now."

Simon MacKay, head of property agent Knight Frank's residential development consultancy department said: "The problem with this tower is that the economics of it just don't work.

"People expected to get £500 or £600 per sq ft but half of the Beetham Tower is up for sale at around £360 per sq ft."

A Centros spokeswoman said: "We are reviewing the scheme and looking to cut back on building costs."

Ballymore declined to comment.