Credit crunch hits Gehry project

The controversial scheme was designed by architect Frank Gehry

Multi-million pound plans to redevelop Hove seafront are in tatters after its financial backers pulled out because of the credit crunch.

Dutch bank ING had been due to fund the £290m redevelopment of the King Alfred leisure centre, designed by world-renowned architect Frank Gehry.

But ING Real Estate said volatile money markets and the housing market downturn meant the project was no longer viable.

Brighton and Hove City Council said it was looking for a way forward.

Planning permission for the scheme, which would see flats, restaurants and cafes being built, was granted in March 2007.

In the current circumstances the scheme does not perform against our target criteria ING Real Estate

The controversial "crumpled" design included 754 flats in two towers and several lower blocks.

About 40% was to have been affordable housing.

Plans also included a £48m sports centre with a multi-coloured domed roof.

The council said it had a legal agreement, which included ING, to deliver the scheme which stands until November.

It said it was waiting for the developer Karis to provide a progress report for the cabinet in September.

"In principle, we still support getting excellent sports facilities on the site, which could also provide much-needed housing in a city with a shortage of homes and land," said councillor Ted Kemble.

"These schemes are complicated. Things can change and if they do, we have to reassess."

ING's UK development manager Guy Parker said the company had decided to withdraw with regret.

"The volatility of the money markets, along with the escalating material and construction costs, and the downturn and uncertainty in the residential market, have had a major negative impact on viability of the scheme," he said.

"In the current circumstances the scheme does not perform against our target criteria."

Karis said it respected ING's decision.

"The development agreement with the council is under Karis Holdings and we have other investors in the wings who are interested in coming on board," said Josh Arghiros.

Architect Frank Gehry has pulled out of plans to build two futuristic towers