Westfield and Hammerson have ended their feud over the redevelopment of riot-hit Croydon by forging a joint venture to upgrade the town’s retail centre in a £1bn scheme.

Westfield has acquired a 50% interest in the £115m Centrale shopping centre from Hammerson. The joint venture will also purchase a 25% interest in the Whitgift Centre, following completion of Hammerson’s conditional acquisition agreement with Royal London.

Under the agreement, property giants Westfield and Hammerson intend to redevelop and combine the two main Croydon shopping centres - the Whitgift Centre and Centrale - to deliver a “comprehensive and transformational” change to Croydon, which was set ablaze during the English riots of summer 2011.

The mixed use scheme of around 200,000sqm will include retail, leisure and residential, with the potential for hotels and offices, and will create more than 5,000 jobs.

Both developers had been at loggerheads, but have now devised a plan which combines elements of both their schemes. It is anticipated that planning consent could be secured in 2013, and construction is expected to start 2015.

Westfield will lead the design and construction of the project. Hammerson will continue to asset manage Centrale and any further acquisitions prior to the development of the Whitgift Centre. Westfield will lead the project development team and it is intended that Hammerson will lead the asset management of the completed centre.

Mayor of London Boris Johnson said: “Croydon has huge potential to return to its former glory as one of London’s most vibrant town centres, and a major driver of its economy. The redevelopment of the Whitgift Centre at its heart is crucial to this vision.”

Westfield chairman Frank Lowy said: “The £1bn redevelopment joint venture with Hammerson will provide certainty for the residents, local businesses and retailers of Croydon and the region.

“The delivery of a major retail regeneration scheme will re-establish Croydon as South London’s premier shopping district and will be a catalyst to further investment and development in the Croydon borough.”

Hammerson chief executive David Atkins said “We have shown our commitment to Croydon through our existing investments in the town centre and I believe that by working together we can deliver a world class scheme for retailers and residents.

“Both we and Westfield remain excited and convinced by the opportunity in Croydon, which we can now progress with clarity.”