Bank funding halt shuts Reykjavík hotel tower site

All contractors working on a hotel tower on Skúlagata in Reykjavík were sent away and the construction site was closed after the project’s bank stopped further funding, mbl.is reported, citing RÚV.

According to RÚV, a representative of Rauðsvík ehf., the company behind the project, told contractors shortly after they arrived for work on Monday that construction had been suspended and they had to leave.

The tower was reported to be nearly complete this summer, but water damage to its finished units has affected the project. RÚV documents suggest Arion Bank is the project’s main creditor. A bank spokesperson told mbl.is that staff could not comment on individual customers. Rauðsvík representatives could not be reached.

Approved in 2015, the project began in 2018 with the demolition of older buildings. Construction was paused in 2020 and 2021 because of the pandemic, and the hotel had been expected to open by the end of 2021.