On paper it looks like being one of the biggest property coups of 2000. The Millennium Dome is estimated to have cost almost £900 million sterling with the British government pumping in £629 million. Yet Legacy, the consortium 80 per cent controlled by Irish property company, Treasury Holdings, has been selected as the preferred purchaser for just £125 million sterling. This figure has not been broken down but industry sources say an initial payment of £50 million would be paid when (and if) the deal is signed next February with the balance £75 million being paid a year later. The British government could also be entitled to a percentage of development profits and possibly a share of rents. However, the £300 million valuation put on the site has been described as "a bit soft" by Mr Maurice Harte, Treasury's chief executive which implies a bonanza.

Legacy's plan, conceived by politically connected British property entrepreneur, Mr Robert Bourne, is to build a high-tech business park inside the dome which with its related buildings and service area occupies two-thirds of the 63-acre site. McAlpine which is understood to have taken a 5 per cent stake in the project (Bank of Scotland is also thought to have a 5 per cent interest) will convert the inside of the dome.

Treasury plans to develop the remaining one-third as offices, hotels and apartments. This site faces the Royal Docks and part is facing Canary Wharf. As this is unencumbered with structures, it is a valuable site. There are, however, major environmental issues to be addressed. Some London property valuers reckon it could have a value of some £100 million provided it gains the necessary planning approvals without hitches. That assumes rents at a fraction of Canary Wharf's so that could turn out to be on the low side. Taking an optimistic view, it could be argued that the consortium is getting the Dome, and structures for nothing.

Treasury which is controlled by property duo, Mr John Ronan and Mr Richard Barrett, plans to spend up to £300 million in converting the dome which closes at the end of the year. The plans are innovative and ambitious and involve the development of multi-office units of 20,000 to 55,000 sq. ft. Being adjacent to Canary Wharf and having a tube line are definite pluses.

Other bidders, however, have pointed to major environmental problems as stumbling blocks to their doing a deal. These views could be tainted with jealousy. Nevertheless, the engineering report, prepared by Halcro, to help prospective buyers in 1998 said the ground beneath the Dome contains "potentially harmful contaminants, the volatile hydrocarbon benzene, and the gases methane and carbon dioxide". That report also gives details of the efforts undertaken by the former owner, British Gas to decontaminate the site. The site directly beneath the dome has been decontaminated but with a changed use, may demand further sealing.

The Financial Times last week quoted Mr Simon Fullalove of the professional journal of the Institute for Civil Engineers as saying "the big problem with the dome was that it was over a huge tar pit. The rest of the area has a huge clay cap - a geotechnically engineered process used to cap the contaminants". He also said the construction of large buildings, such as offices, is likely to penetrate the clay cap. Although what lies underneath has been cleaned, it would require further decontamination.

The site to the south of the dome has no cap and would need to be decontaminated. The British Government, aware of the potential problems, had offered to give indemnities for any liability for a 15-year period, but some bidders felt this was not long enough.

Another potential problem concerns the dome structure which has to be kept for a period of 15 years under the deal. It appears that a local contractor was used to do a repair job and that this may have extinguished the indemnities provided by the original builder.

However, according to industry sources, Treasury has been fully aware of all the potential problems and these have been factored into its business plan which envisages a substantial gain from the venture.

Nomura, the Japanese bank, however, took a different view and pulled out after spending a year looking at the project. This is understandable as it had a different business model and was opting for the already failed leisure theme.

London property sources said Mr Ronan and Mr Barrett were "brave" in taking on the dome site. Anything to do with Blair's White Elephant Dome is politically charged. And plans to build a tunnel under the Thames linking the Dome with the Royal Docks at a cost of £295 million to the British exchequer will not go through without sharp debates. On the plus side will be a determination by the British Government to avoid any further adverse publicity and a determination by Mr Ronan and Mr Barrett to make it work.