Around £75 million has been wiped off the value of Aberdeen’s Teca according in an audit of the council’s books.
KPMG has revealed the replacement exhibition centre, which includes the P&J Live arena, two hotels and an energy centre, is now worth around 80% of what it cost to build.
The draft audited accounts show Teca – or The Events Complex Aberdeen – was completed last summer at a cost of £393.7 million.
But after the accountancy firm challenged council valuations, the replacement exhibition centre near the airport has now been rated as being worth £318.7 million.
In a report, auditors said they had “challenged” how the completed Teca had been valued – as it was marked down in the accounts at the actual price of construction.
They also pushed the council to think about how the pandemic might affect the value of its assets.
Its construction was originally costed at £333 million.
Concerned political leaders warned the huge change should be viewed as a barometer for how the north-east economy is faring, as it contends with the pandemic and turmoil in the oil and gas industry.
Last night, the leader of the SNP on the council, Alex Nicoll said: “It is incredibly concerning that the value of only recently completed property investments have dropped so much in such a short time.
“Ultimately, this is grim reading for Aberdeen and the north-east, and shows a lot of work needs to be done to get the economy back up and running after the impacts of the perfect storm that is the oil price crash and Covid-19.”
The two hotels built as part of the Teca project took the largest hit in value, as assessors priced them at £14 million, knocking £70.5 million off their worth.
The new 12,500-seat arena, P&J Live, was also found to have fallen around £20.5 million in worth, now valued at £246 million.
The replacement exhibition centre opened in time for Offshore Europe last September and has already hosted tens of thousands of people at events including Scotland’s largest indoor concert, when Gerry Cinnamon came to the north-east last year, and chart-topper Lewis Calpaldi– who played just days before the coronavirus lockdown was imposed.
And council co-leader Douglas Lumsden said: “The new Teca certainly caught the imagination of the public of the north-east of Scotland pre-Covid-19 with thousands of citizens enjoying conferences and concerts.
“I am confident this will still be the case after the pandemic with many conferences and concerts booked for 2021 and beyond.
“In respect of valuation, it is important citizens look at the council’s total value of assets which the accounts show are £2.6 billion, meaning the council’s net worth is £1.21 billion rather than the valuation on individual council buildings.”
His optimism was shared by Liberal Democrat group leader Ian Yuill, who added: “The council didn’t build Teca with the intention of selling it so, while any fall in value is not good, it is not an immediate concern.
“If the value of Teca is below its construction cost in five years that might be a concern but a single year drop, in these exceptional circumstances, is not unexpected.
“I would be fairly confident its valuation will recover alongside the economy.”
