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Skanska targets 500 homes a year with cautious expansion plans

Skanska is looking to build 500 homes each year, targeting the South-west while also keeping London on its radar, CN has been told.

Skanska head of residential development Magnus Andersson conceded that the weak UK housing market has slowed the firm’s expansion plans, but revealed the firm is also “looking at” sites in Cheltenham and Bristol.

Skanska has already launched in parts of the East of England and had previously flagged London as a target – though Mr Andersson said no decision has been taken yet on a move into the capital.

Mr Andersson also told CN that the firm is considering a factory to accommodate offsite construction processes, widely used in its native Scandinavia.

Skanska – an established housebuilder in northern Europe – officially launched its UK business, Homes by Skanska, at the end of last year after announcing it at the end of 2010.

Mr Andersson said it was seen as “a good complement for the construction business we already had here”.

It is currently focused on the East of England region with a site in the South-west, and aims to build high-quality homes while creating sustainable communities, said Mr Andersson.

Skanska is targeting 500 completions per year by 2015, after recently opening its first in Seven Acres, in Cambridge, where prices of the 128 properties range from £295,000 for a two-bedroom apartment to £760,000 for a four-bedroom, three-storey townhouse.

The firm also has a 12-acre site in Cambridge at Great Kneighton, with the potential for 310 units, along with a 4.1 acre site in Bath, with construction expected in 2013.

Mr Andersson said: “If the market had not been as weak as it is today I think our ramp up plans would have been a little bit faster and we perhaps would have gone into a third region quicker.

“The next step would be London… but we are not taking any decision.

“We are looking at a site in Bristol and one in Cheltenham.”

Skanska UK recorded revenue of £537 million in the first six months of this year, down from £636m in the same period in 2011. Operating profits rose 9 per cent to £20.2m. 

He added: “In terms of the volume, what we have said is that by 2015 we will be doing 500 units per year.”

Mr Andersson said the division is aimed at being mid-sized and a “niche player that will really focus on good quality homes and sustainability”.

“When we started looking at this opportunity, it was not just the financial business case and the fact that we had a strong construction operation.

“We also said that if we were to enter this market, we would need to be different,” said Mr Andersson.

“We think it’s a very big market and we think it will recover in the long term.

“It’s a good opportunity for a company with a strong balance sheet to come in and recruit people at a good time in the business cycle.”

Mr Andersson said Scandinavia is used to offsite construction processes.

“The one that we have at Seven Acres is traditional construction but we definitely have an ambition to look to more industrialised processes.

“That’s definitely a direction we want to go; more industrialised, offsite manufacturing, BIM solutions – making the whole procurement chain more efficient.

“It would be either through the supply chain or setting up our own factory, but that decision has not been taken yet – we are looking at several options.”

Mr Andersson added that the most obvious competition for Skanska is Berkeley, both in terms of the quality of the homes and its geography.

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