OPTIMISM remains high that work will begin next year on Newport's flagship Friars Walk shopping centre project, despite the withdrawal of developer Modus from the joint venture.

A start on the development - a vital part of long term regeneration plans for the city - is still pencilled in for the third quarter of 2009, despite Modus' withdrawal as a source of capital for the £200 million centre.The company intends to remain involved as the scheme's development manager.

"Residents should be reassured there remains a strong commitment from all parties to deliver the Friars Walk development for Newport," said city council leader Matthew Evans.

"We are fully aware of the financial considerations partners currently have to make in light of the present economic climate, and the reasons for Modus’ decision."

The scheme is among five owned by Modus in a joint venture with investor and developer Ciref. Modus is set to sell its 50 per cent stake in these because, according to a report at propertyweek.com, it is not in a position to provide capital.

But Modus boss Brendan Flood told the commercial property publication that Friars Walk could still start in the third quarter of next year.

The project is being backed by Modus Corovest (Newport) Limited, the Corovest part referring to the link with Ciref (Corovest International Real Estate Fund).

The Argus understands Corovest is still very much on board and that Modus' decision will not derail the project.

A Ciref spokesman said: "Friars Walk will still go ahead and if anything, it may go ahead quicker." He declined to comment further.

Friars Walk is set to include dozens of new stores, a cinema, restaurants and apartments.

Newport Council is pursuing the project with "unswerving dedication and a single-minded sense of purpose," said councillor Evans.

"Positive negotiations are continuing with Corovest about the funding element of Friars Walk. Corovest have been involved in the project since the very early stages as equity investors and along with Modus have reiterated their steadfast support for the project.

"Modus will continue to be involved with the project, focussing on their extensive knowledge of retail development to help successfully bring Friars Walk to Newport. At this stage we are still looking to be on-site in 2009."

Newport Unlimited, the urban regeneration company, remains confident in Friars Walk.

"We hope to get the development begun sometime in 2009," said chief executive John Burrows.

A Modus spokesman said the company is working hard on the proejct "to keep the momentum going."