But a separate statement put out on the London Exchange by Berkeley Group, owner of Crosby, confirmed it is in preliminary talks "which may or may not lead to the sale of its Crosby unit." Berkeley added that "it has received approaches, including one from Australia's Lend Lease Corp. Ltd, regarding the possible disposal of the unit that operates principally from Manchester, Leeds, Birmingham, Cardiff and Bristol."

The purchase of urban regeneration specialist Crosby Homes would strengthen Lend Lease's hand in the Midlands and see a return to homebuilding by Bovis, Lend Lease's UK construction subsidiary. Discussions are now believed to be centering on Lend Lease securing a controlling interest. Berkeley has owned 49.9% of Crosby shares after Crosby chairman Geoff Hutchinson led a management buyout of 50.1% of the company in August 2003.

Lend Lease has been attracted to the sector by the government's ambitious plans to build more houses in the UK, which has spurred a gold rush by developers. Last month, property investor and developer Gerald Ronson attempted to strike a deal with homebuilder and regeneration specialist Crest Nicholson. But the talks fell apart because the euro 716.06-million ($868.55-million) bid by Ronson's company, Heron International, was too low.

Bovis, now known as Bovis Lend Lease, left the housing market eight years after former owner P&O floated Bovis Homes on the stock market. In 1999 P&O sold Bovis to Lend Lease. Lend Lease, with a market cap of euro 3.7 billion ($4.5 billion), has had success in winning work in the Midlands and northern England. Two months ago it announced it had been chosen as preferred partner for the University of Sheffield to build an accommodation village for up to 4,000 students.

Crosby, with offices in Edgbaston, Altrincham and Leeds, would certainly strengthen that presence. Crosby's biggest project is Greenquarter in Manchester, where it is building 1,500 apartments over five years.