Skanska UK has announced it will not build any more homes as a developer under its Homes by Skanska brand “for the forseeable future”.
According to the AJ’s sister publication Construction News, the company is pulling out of residential development in the UK, saying it can make better returns in infrastructure, commercial development and construction.
The multinational outfit, which has been working with Formation Architects, Proctor and Matthews Architects, PRP Architects, CF Moller, White Design and Feilden Clegg Bradley Studio said it would continue to build residential and mixed-use units, but only as a contractor on sites owned by other firms.
Skanska, which in 2011 boasted that it would be putting up 800 homes a year by 2015, confirmed it would no longer buy land for its own housebuilding.
Skanska UK executive vice president Roger Bayliss said: ‘Residential ties up quite a lot of cash and we think we can get better returns on it in other business streams. We’re offering construction capability and development capability.
‘What we are saying is we don’t want to buy parcels of land and build them out ourselves. ‘On mixed use, we are offering development skills like masterplanning and layout.’
The firm will finish its only development - the Seven Acres development of 70 houses and 58 flats in Cambridge - over the next year and will provide ‘customer care’ to buyers there.
However, it will not start to build any more developments of its own ‘for the foreseeable future’.
Andy von Bradsky of PRP said: ‘It is a great disappointment as Skanska had innovative ideas but it was inevitably going to be difficult for them given the tightness of margins and difficult economic circumstances.
Skanska had innovative ideas but it was inevitably going to be difficult
‘There is still much to learn from their organisation and European approaches to development generally in terms of architectural aspiration, quality and funding regimes which I hope will not be altogether lost.”
Skanska has two more sites in Cambridge, one in Cheltenham and one in Bath which either have planning permission or are awaiting it.
Bayliss said the firm will get permission for the sites before selling them. ‘We will do an orderly disposal of those parcels of land; it is not a fire sale,’ he added.
Skanska’s decision comes against a backdrop of volume housebuilders and developers reporting rising turnover and good margins.
In construction, contractors’ margins are generally lower. Four jobs are at risk in the business, which is known both as Homes by Skanska and Skanska Residential Development UK.
Skanska said it planned to keep most of the 25-strong team to work on other activities. The residential arm made a pre-tax loss of £3.6 million in 2012 and £3.4 million in 2011. But Bayliss insisted the pre-tax losses were not part of the decision to move out of developing its own residential sites.
He pointed out that the company was new and so had spent money on land and construction but had not yet had time to complete its first scheme and recoup the money through sales.
Skanska’s firms in other countries will continue to do residential development and are unaffected by the UK change.
Skanska set up its UK residential development business in December 2010. Initially it reported directly to the parent organisation in Sweden, but in April 2013 the unit was bought into Skanska UK.
Previous story (AJ 23.11.2011)
Skanska names architects for new homes drive
Contractor Skanska has chosen six architects, including CF Moller and White Design, to design future housing schemes for its emerging UK development arm
Formation Architects, Proctor and Matthews Architects, PRP Architects and Feilden Clegg Bradley Studios have also been selected from more than 30 submissions to work with Skanska Residential on a series of large-scale projects.
Last month the company announced it had won planning for its first residential development scheme in the UK - a 128-home scheme at Great Kneighton in Cambridge designed by Formation Architects - and that it had bought further land with the poitantial for 310 further homes at the site.
Skanska said it was now working with four of the six finalist architects on ‘future housing developments’.
The two-stage, anonymous contest ‘took place over several weeks and involved the firms collaborating with each other to develop a proposal and then roleplaying for Skanska to understand how the different architects interact with customers’.
Seven Acres, Cambridge - Skanska’s first residential project in the UK, designed by Formation Architects
Jamie Wilding, development manager of Skanska Residential, said: ‘We wanted the architects to be creative and to show us what they stood for. Most of the architects liked the unexpected and creative approach to the competition. The six successful firms really listened to the customers and tailored their presentations to them. The whole idea is to design new homes for real people.”
Magnus Andersson, president of Skanska Residential UK, said: ‘It’s important to listen first and find out what people need from a new home. We need to focus on better quality products, green solutions and to be recognized as a design focused developer. This is what the competition was all about, finding architects who had a similar ethos to us on customer benefits and who we could work with to deliver our vision.”
Stephen Proctor at Proctor and Matthews commented: ‘This is an extremely significant development for our practice, and we’re delighted to have been chosen by Skanska to work with them on their first venture into residential development in the UK. We’re particularly thrilled to have come through a very thorough competition process where we were up against some very big names.’