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.

February 6, 2023

Housebuilding slowdown hits construction and UK gigafactory construction revived | Fortnight ahead

Company news

Nexus Infrastructure (NEXS, 170p, £77m mkt cap)

Provider of infrastructure services, utilities connections and smart energy. Completion of disposal of TriConnex and eSmart Networks and board changes. Disposal of TriConnex and eSmart Networks to FWCP Spark (UK) Holdco for a total cash consideration of £77.7m, has now completed. As previously announced, Nexus intends to return approximately £65m to shareholders by way of a tender offer, which will be subject to approval by Nexus shareholders.  A circular containing details of the tender offer is expected to be published shortly. As announced on 30 December, Mike Morris is today stepping down as CEO of Nexus and becoming a non-executive director of the company; Alan Martin, CFO, is leaving Nexus and stepping down from the Board as CFO. Both Mike Morris and Alan Martin are becoming directors of the Purchaser. In their place Charles Sweeney is today joining the Nexus Board as CEO and Dawn Hillman as CFO. Charles Sweeney was previously COO of Nexus and Dawn Hillman was previously Finance Director of TriConnex and Nexus Company Secretary. Together, they have been with Nexus for over 40 years.

Economic data

Construction activity. UK housebuilding recorded its biggest drop in activity for 32 months in January, while commercial and infrastructure were largely unchanged, according to the latest CIPS UK Construction PMI release from S&P Global. Housebuilding registered an index of 44.8 (50 = no change) during the month, down from 48.0 in December. Commercial contracted slightly to 48.2 from 50.3; while Civil Engineering recovered to 49.7 from  46.8 – bringing the total work industry down slightly from 48.8 to 48.4. Employment numbers decreased for the second consecutive month in January, with the rate of job shedding the fastest for two years; companies also referred to hiring freezes and the non-replacement of voluntary leavers due to softer demand. Lower demand for construction products and materials helped to alleviate pressures on supply chains at the start of 2023. There was a slowdown in overall input cost inflation during January, which marked the second slowest rise in purchase prices since December 2020. Where higher cost burdens were reported, this was mainly linked to increased energy prices.

Meanwhile in the Eurozone, there was a reduction in the rate of decline after nine consecutive months of contraction, at 46.1 for January following a post-pandemic low of 42.6 in December, with a similar cooling in input cost inflation to that in the UK.

Contruction-PMI-image-2023

Mortgage demand. Last month experienced the greatest volume of mortgage searches in a single month, up by 6.4% on the previous best-ever month, September 2022, according to financial advice platform, Twenty7tec (link). However, although January was the busiest ever month for re-mortgage searches, it was only the 13th busiest for purchase mortgage searches. In January the platform saw fewer sub £250k searches than in December 2022 but 5.5% more searches for properties valued at over £1m. There was an 11.4% increase to 14,888 in mortgage products and variants, with the biggest increase being 14.6% for 90% maximum LTV products.

In other news …

Industrial construction. Australian investment group Recharge Industries has been appointed preferred bidder for car battery firm Britishvolt which went into administration last month and plans to build one of the UK’s first EV battery ‘gigafactories’ in Northumberland, ConstructionEnquirer.com (link). Britishvolt was building a £300m car battery plant in the region before being placed in the hands of administrator EY with most of Britishvolt’s 200 staff made redundant. EY has now entered into an agreement with Scale Facilitation Partners LLC and its indirectly wholly owned subsidiary Recharge Industries Pty to be the preferred bidder in acquiring “the majority of the business and assets of Britishvolt”. The Australian group has confirmed it “can’t wait to get started making a reality of our plans to build the UK’s first gigafactory”.

 

British Volt saleFortnight ahead
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