Redrow in shock plan to sell off Scottish arm

Published on Monday 18 April 2011 22:49

REDROW yesterday dealt a blow to the depressed housebuilding sector north of the Border as it announced shock plans to pull out of the country and put its loss-making Scottish business up for sale.

The listed firm, which has operated in Scotland since 1995 and has a staff of about 60, said it was unable to generate "acceptable" returns from the business and was retreating to London and the south-east of England, where it anticipates it will be able to achieve higher margins.

Redrow would not comment on the sale process but sources said the firm had already held preliminary talks with a number of parties. But they insisted it was "very early days".

The marketing brochure detailing the exact size and nature of Redrow's business in Scotland is yet to be published and the firm refused to elaborate on what would be included in the sale.

According to the Welsh housebuilder's website, it currently has eight developments spread across the Central Belt, including two in Glasgow, one in Dalkeith and one in Motherwell. It predominantly specialises in three to four-bedroom homes in Scotland.

Last year the Scottish business, which is headquartered in Larbert, near Falkirk, had a turnover of 31 million, completed 185 sales but made a "small" loss, Redrow said. It accounts for about 7 per cent of the company's total turnover.

It is understood all staff would be transferred to the buyer in the event of a successful sale. However, industry sources last night cast doubt on who would be in a position to acquire the business.

One property expert said: "Not many folk in Scotland even have the cash to look at it. If you do have money there's so much more to go for in the English market."

Rival housebuilders Barratt Developments, Miller Group and Mactaggart & Mickel all declined to comment on whether they would be interested in acquiring the business.

Lindy Patterson, construction partner at law firm Dundas & Wilson, said Redrow's retreat was a sign that market conditions remain tough in Scotland.

"It's an example of when things are hard - companies tend to retreat to their core areas and that means core geographical areas as well. No doubt you'll see more of that."

News of Redrow's withdrawal from Scotland came as the firm announced "encouraging" sales activity across its UK business between 1 January and 17 April, with net reservations up 2 per cent to 1,189 while its private order book stood at 139m, 6 per cent up on the same period in 2010.

The business, which is headed by Steve Morgan, owner of Wolverhampton Wanderers Football Club, said it has averaged 0.7 sales per outlet a week since the start of 2011, compared to 0.65 a week at the end of last year.