Lend Lease 'can deliver on UK project'

The nation's biggest property developer last week added to its lucrative run of UK construction work by winning a STG1.5 billion ($A3.57 billion) project to pump life back into the crime and poverty plagued Elephant and Castle area south of the River Thames, three kilometres from London's West End.

The latest project win - where Lend Lease will build more than 3,500 new homes, shops and restaurants, leisure facilities, offices and public transport infrastructure - came just months after it was named preferred developer for London's $8 billion Olympic Village.

Mr Clarke told ABC TV that property development was not without risk but reassured the market that neither of the projects were of high risk.

"We've had our bumps in the road along with everybody else but we've got a good plan around these two projects and we think we can deliver on it," he said.

"Well we don't believe that either of these two are highly risky projects."

The confirmation to deliver comes in the face of a disastrous Bovis Lend Lease-led STG382 million ($A910.29 million) six-year Manchester Joint Hospitals project, where it admitted it had not fully appreciated the risk and had failed to adequately price the construction.

"They're not construction projects, we don't even have to use Bovis (the construction arm of Lend Lease) if we don't want to, they're major multi-billion dollar development projects of which Bovis can be the master planner but in the end we can sub-contract some of the construction if we wish to mitigate the risk," Mr Clarke said.

Despite the Manchester setback, Mr Clarke said Bovis will manage the new Elephant and Castle project, and possibly lead some of the construction.

He also said that Lend Lease had no intention of spinning off or selling Bovis.

"No we have no aspirations other than to keep it as a valued part of Lend Lease," he said.

Mr Clarke also squashed any rumour that the firm was left vulnerable and open to a private equity approach.

"We don't feel vulnerable at all. We're successful, we're meeting our numbers, we're going to meet market expectations again this year," he said.

"If anybody thinks the business is worth more to them, we'll give them a fair hearing, but we believe we are delivering for our shareholders."

Despite some informal calls inquiring about the business, Mr Clarke said the Lend Lease board had not received any formal offers for the company.

With a pipeline of projects around $50 billion, Lend Lease will raise its 15 per cent debt level to around 30-40 per cent, still leaving some breathing room if the property market turns sour in the UK.

Meanwhile, Australia's residential property cycle is passing though a slump, with official interest rates likely to rise from 6.25 per cent next month after last week's inflation figures came in higher than expected.

Mr Clarke said Australia's property market differs across the nation, with Western Australia still a hot market.

"NSW is the worst of the lot, we are having real trading problems in our residential business in NSW, luckily the other states are performing well," he said.

"We are probably three and half years in a slump but I'm told historically it's never lasted longer than two years so we've seen no expectation of a recovery in the short term in NSW.

"If it does recover, great, but our business forecasts aren't projected on the recovery."