‘Significant progress has been made’ on the long-delayed redevelopment of the Observatory and Queensmere shopping centres, the Observer has been told.

Plans to demolish the two town centre shopping malls and replace them with new businesses, shops and homes were approved by councillors in September 2022. But no work has since been done.

Now Slough Borough Council says it’s close to completing the final legal agreement with property owner the Abu Dhabi Investment Authority (ADIA) needed to grant full planning permission. It says the Abu Dhabi state-owned company may then seek to hand the land to another developer.

A council spokesperson said: “Significant progress has been made in recent weeks and we are close to signing the S106 agreement with ADIA which will mean they have planning permission and can move the scheme forward.

“In this context, we understand ADIA are exploring a number of options including a partnership with a leading build to rent developer and a range of other options including sale to a specialist residential developer.”

Under the plans the two connected shopping centres would be closed off, demolished and replaced with over a thousand new homes, along with shops, offices, and public open space.

But the construction industry has been beset by problems relating to the impact of the Covid-19 pandemic and inflation. The Observer reported in March this year that ADIA was seeking support from the government to continue with the project.

In a pre-general election debate last month, Slough’s MP Tan Dhesi suggested that ADIA had decided not to continue with the project.

Speaking at a hustings inside the Queensmere centre on June 4, Mr Dhesi said: “It has come to such a state that the owners of both shopping centres have decided they’re not proceeding with their developments.”

The new update from the council does not necessarily contradict Mr Dhesi’s claim, as the statement suggests ADIA is seeking to pass the project on to a new company once a Section 106 planning agreement has been signed.

Section 106 agreements outline what contributions developers will make to services and infrastructure needed to support new developments.

They’re a normal part of the planning process, usually worked out after councillors grant approval, and formal planning permission isn’t granted until one has been signed.

New developers may prefer to take on the project once the agreement is in place as it will mean they won’t have to seek planning permission themselves.

British Land – which represents ADIA – said it will ‘continue to actively work with the local authority to review the development and will provide a further update when one is available.’

Slough Borough Council said it expects ADIA to make a decision by autumn.

The spokesperson said: “We expect them to have determined their next steps by the autumn but are continuing to apply pressure on them to resolve all outstanding planning matters and progress to selecting a delivery partner or selling the site as soon as the full planning permission is in place.”