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A massive regeneration scheme in the heart of Wales’ capital has been given a £400m boost today – which could secure up to 10,000 jobs in the city.

The deal sees financial services giant Legal & General invest in a major stake in Cardiff’s Central Square project – which promises to redevelop one million sq ft of land – transforming the area around the city’s station into a thriving business district.

It is the biggest property deal ever seen in Wales.

The massive nine-figure agreement has been welcomed as a “major vote of confidence in the Welsh economy”.

It led UK Chancellor George Osborne to suggest up to 10,000 jobs could be created in the city as a result.

The development will eventually see up to one million sq ft of new offices, homes and shops being built around Cardiff Central Railway Station.

Ambitious plans

Legal and General has effectively acquired a string of investment projects in the ambitious regeneration project and provided the finance to bring forward the next phase of developments.

The deal struck between the property investment arm of L&G and developer Rightacres Property includes:

The proposed new headquarters for BBC Cymru Wales at the heart of Central Square – for which final sign-off by BBC executives in London is expected this side of Christmas;

The close-to-completion No 1 Central Square building;

The development plot for the proposed No 2 Central Square office scheme which could extend to 150,000 sq ft; and

The Interchange development, which as well as serving as the location for a new bus station and transport hub, includes plans for 200,000 sq ft of new office space, a 150-bedroom hotel and 200 private residential apartments.

The deal has been welcomed by UK chancellor George Osborne.

He said: “Today we see a major vote of confidence in the Welsh economy with a new partnership between Legal & General and Rightacres.

“The £400m regeneration project which will be delivered through this partnership is fantastic news for working people across Wales and will help transform Cardiff’s city centre, creating 10,000 new jobs.”

It is understood 1 Central Square, which has already signed up its first tenant – law firm Blake Morgan – was acquired for £40m; the BBC Wales HQ acquired for £80m (subject to final sign-off); No 2 Central Square for £40m; and the 400,000 sq ft interchange scheme for around £150m.

Expansion for Legal & General

The remaining £80m would help push the next phase of developments, focusing initially on the former Media Wales site north of Wood Street, possibly as student accommodation and housing.

Legal & General, which is also expanding its financial services operation in Cardiff in a move creating hundreds of new jobs over the next few years, has entered into a joint venture partnership with Cardiff-based Rightacres, to deliver the Central Square masterplan, designed by Foster + Partners.

Central Square could eventually accommodate 10,000 jobs.

Having committed £1.5bn in co-investing its core capital beyond London, into critical regional urban regeneration projects that support UK growth, the deal is the second project to be delivered through L&G’s Regeneration Investment Organisation (RIO) partnership.

Related story: Sion Barry's verdict on the deal.

'Exciting new chapter'

It follows L&G’s £400m backing of a regeneration scheme in East Leeds which it will develop in partnership with Scarborough Group.

The UK Government is supportive of the fund, which it is hoped can grow with co-investment from other financial institutions globally to £15bn.

Welcoming the new deal Phil Bale, leader of Cardiff City Council, said: “Cardiff has a long established relationship with L&G, as one of the Cardiff capital region’s major employers, and this latest news represents an exciting new chapter which clearly demonstrates their confidence in the region.

“Central Square is a major priority for the Council which will create a fabulous gateway to Cardiff and the rest of Wales.”

Laura Mason, director of direct Investment at Legal & General Capital, said: “Cardiff has been hugely successful in establishing itself as real player in the inward investment arena and Central Square represents the most exciting regeneration scheme due to come forward in Wales.

Momentum continues

“Located in a prime city centre location, it is set to deliver major social and economic benefits, and proves the model for the public and private sectors working together in order to unlock real UK growth.

“We look forward to working closely with our new development partners and Cardiff City Council to deliver this major project and attract further investment to the area.”

Paul McCarthy, chief executive of Rightacres, said: “Having a funding partner like Legal & General alongside us in Central Square will maintain the momentum we have been building around the scheme.

“L&G has a real understanding of the Cardiff market and they have demonstrated to us that they are able to react quickly to our proposals which will allow us to deliver the Central Square masterplan over the next few years.”

First Minister Carwyn Jones said: “I’m delighted to see another significant investment in the heart of our Cardiff Central Enterprise Zone.

“It accords with the line of travel envisioned by the financial and professional services sector for the enterprise zone and more widely for the Cardiff Capital Region.

“This confidence, demonstrated by Legal & General who are an important anchor company, shows a growing belief in the prospects of the Welsh economy.”

The Cardiff of Knight Frank acted for L&G on the acquisition.