Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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July 4, 2023

Half of commercial landlords doubt net-zero targets; John Lewis progresses home rentals strategy | CRN, OTMP

Company news

Cairn Homes (CRN, 100p, £674m mkt cap)

Leading Irish housebuilder. HY (Jun) trading update.

Guidance: “The company remains on course to deliver another year of growth across all key financial and operational metrics. Unit closings, profit and cash generation are, as in prior years, heavily weighted towards the second half of the year and current full year guidance is reaffirmed and updated”: revenue in excess of €650m; 1,750 – 1,800 closed home sales, including over 800 Social & Affordable; core housebuilding gross margin of c. 21%; operating profit, €105 – €110m.

Trading: Closed 535 new home sales across all tenures; total core revenue, c. €215m. Demand for nZEB (nearly zero-emission building) compliant, A2-rated new homes “remains exceptionally strong across starter and trade-up/down houses, duplexes and scaled apartment developments”. Current closed and forward sales pipeline has grown by in excess of 300 new homes since last update on 11 May 2023 to 2,230 new homes with a net sales value of over €800m. Sales pricing levels were relatively flat in the period despite persistent, if moderating, build cost inflation which is expected to be c. €10,000 per unit in FY23. All four annual sustainability performance targets met, aligned to decarbonisation, biodiversity and people strategies. “Government housing policy remains very supportive through the fully funded ‘Housing for All’ strategy”. Capital funding of €4bn in 2023 is supplemented by an additional €1bn, announced in April 2023, in respect of development levy and water connection charge rebates and a new cost rental subvention scheme to deliver more affordable rental homes.

Outlook: All forecasted closed new home sales in 2023 and nearly 90% of expected closings in 2024 have full planning permission. “This will underpin our continued growth as we make progress towards our 15% return on equity target”. HY results, 7 September.

OnTheMarket (OTMP, 53p, £42m)

Agent-backed residential property portal. Directorate update. Following the announcement made on 24 January, Tom Carter has joined the company as CFO effective immediately. HY (Jan) results, 10 July.

In other news …

Commercial property/net zero. Just under of half of commercial landlords believe it is too difficult and costly to implement environmental regulations, casting doubt on the industry hitting net-zero targets, according to a survey commissioned by Property Week (paywall). In a study of 250 commercial landlords with office buildings in the UK, 49% agreed it is difficult to keep up with regulations on energy efficiency standards, while the same figure said it is too costly to improve a commercial property’s energy efficiency.

Build-to-rent. John Lewis Partnership’s entry into the BTR market has moved a step closer after the retailer submitted planning applications for its proposed schemes in Bromley and West Ealing, to deliver around 800 new homes near and around Waitrose stores, Property Week.

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