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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February 19, 2024

SPR, UTG, AUK | Economics – Annual house prices turn positive for first time since July, Rightmove

Company news

Springfield Properties (SPR, 76p, £91m mkt cap) – SPR is a client of PERL

Scotland’s only quoted housebuilder. Sale of land. Springfield has signed an agreement for the sale of approximately 11.2 acres of land for £8.7m. The land, which equates to 85 plots, is fully owned by the Group, such that the cash inflow to the Group will be £8.7m. It expects to receive £6.5m in the current financial year and the remainder in the following year. The proceeds from the sale will support the Group’s ongoing target to reduce debt.

Outlook: “We are pleased to have agreed another profitable land sale, which brings the total since October 2023 to over £18m. With one of the largest, high-quality land banks in Scotland, these sales are an attractive way of monetising our land bank without impacting our development pipeline. We are in advanced negotiation regarding further land sales, which remains a key element of our strategy to reduce our bank debt”.

Unite Group (UTG, 998 p, £4,367m)

Owner, manager and developer of UK student accommodation. Entry into a JV framework agreement with Newcastle University for the development of 2,000 new student beds, at the University’s Castle Leazes site in Newcastle, representing total development costs of c. £250m (Unite share, £128m). Unite will act as development and asset manager to the JV with 51% ownership share. The Castle Leazes site currently provides c.1,250 beds and was built in 1969. Newcastle University has committed to close the existing accommodation on the site and commence demolition in the summer of 2024, with delivery scheduled in 2027 and 2028.

Outlook: “Partnering with Newcastle University is a hugely exciting step for Unite Students. There is a significant opportunity to become the partner-of-choice for universities as they seek to unlock the potential of their campuses to deliver new accommodation and access new funding”.

Aukett Swanke Group (AUK, 1.2p, £3.3m)

UK’s only quoted architect, active in UK, Middle East and Europe. Entry into in a consortium to develop an AI-Based Recommender System for Smart Energy Saving. The lead consortium member is a commercial spin-out from a UK research university. Other members of the consortium include two further UK universities and five commercial organisations, including engineering and construction companies. The consortium has been advised that it has succeeded in the Innovate UK competition ‘Accelerating trustworthy AI: Phase 2 Collaborative R&D’. The consortium will be awarded approximately £0.9m from Innovate UK towards total project costs of approximately £1.2m. The project has a 12-month duration commencing March 2024.

Outlook: “AI will inevitably be necessary to operate smart buildings, and users need to have confidence that AI decisions are reliable and trustworthy. While Aukett Swanke’s share of the project costs and grant are not material to our financial results, we are excited to have been invited to join this impressively broad consortium of academia and industry, as the group continues to explore additional opportunities to use Artificial Intelligence in pursuit of its smart buildings goals”.

Economic data

House prices. Average prices asked for by sellers rose by 0.9% M/M to £363k in February, down from +1.3% in January, but taking the Y/Y change from -0.7% to +0.1%, the first time in positive territory since July 2023, according to today’s House Price Index report from Rightmove. Agreed sales in the first six weeks of 2024 are 16% higher Y/Y, and 3% higher than in the more normal market of 2019. There were also 7% more new listings on the Rightmove portal coming to market than last year, and a 7% upturn in the number of buyers enquiring. However, Rightmove warns the market is very price sensitive and that it is taking more than two weeks longer to find a buyer than at this time last year, with the average time to sell at its slowest since 2015, excluding the initial pandemic lockdown months of April and May 2020. The region with both the highest M/M and Y/Y increases is Scotland (5.9% and 3.7% respectively) while East of England saw the biggest annual decline, -1.9%.

Monthly change in house asking prices
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