The business delivered a record year in land, contracting and residential development with exceptional returns from our activities. Our ambition to invest and grow our business in residential markets throughout the UK continued, with our focus on customers and partners in opportunities on both public and private sector land.
NEW STRUCTURE, CAPTURING SYNERGIES
2016 witnessed the first year of a new structure for residential activity in Wates, bringing our Residential and Developments businesses together within the newly formed Wates Residential Developments Group (WRDG). The businesses remain independent but share a joint Board to capture synergies. As we grow with a broadened spectrum of activity, our capability in contracting, and development with home sales is now aligned with our land promotion, planning and land trading experience.
THE CHALLENGE OF BREXIT
Understandably, the outcome of the 2016 EU referendum presented an additional challenge as land and housing markets reacted nervously during the periods before and following the vote. However, the clear focus of our teams, combined with the quality of our schemes ensured a strong recovery towards the end of the year, delivering record returns in excess of 22% return on capital employed (ROCE).
In Wates Developments we have seen consistent and exceptional profit performance, up 22.3% on 2015, whilst growing the scale of controlled land and sites in planning. The portfolio now has the potential to deliver over 11,000 homes over the next 10 years, two thirds of which are allocated in emerging Local Plans. 2016 also saw a record year in private house sales from our joint venture partnerships with leading housebuilders, up 26% on 2015 and at an average price just under £530,000.
FROM RESIDENTIAL CONTRACTOR TO NATIONAL DEVELOPER
With a new corporate identity and proposition for 2016, Wates Residential completed 646 new homes for seven local authority and housing association partners in the year. The business continues its transition from residential contractor to national developer, with housing association joint ventures, development partnerships and open market sales schemes complementing a strong base of high profile contracting projects.
CONTRACTING AND DEVELOPMENT
We experienced strong growth across both our contracting and development activities throughout the year, including the Cardiff Living development partnership (with City of Cardiff Council). This will deliver 1,500 homes across 40 sites over a 10 year period in the city, all on public sector brownfield land. Planning consent has already been secured for 353 homes across five sites, with the team set to commence construction of all five developments by summer 2017.
Key wins for 2016 included a contracting and development agency project with Rotherham Metropolitan Borough Council to deliver almost 200 homes and a £52.8m contracting scheme with London Borough of Camden Council. Further highlights included the start on site of a 62 home joint venture scheme with Trafford Housing Trust and excellent progress on the second phase of the Erith Park regeneration programme.
Our business views the public land and development sector as a huge growth opportunity that is fully aligned to the Government’s objective of boosting the UK’s housing supply.
WATES DEVELOPMENTS CASE STUDIES
Adjacent to Green Belt and an inlet of the Thames, Wates Developments secured a significant change of use consent in 2016, releasing protected commercial land to create 95 homes. This followed four years of planning promotion and gained excellent local support. The land was openly marketed and sold to CALA Homes for £28.0m, with CALA due to commence development shortly.
We have a wide range of development joint ventures across the South with partners such as Barratt, Linden and Miller Homes. Our new joint venture with Linden to provide 310 new homes in Basingstoke, demonstrated the demand for quality housing schemes, post-EU Referendum, quickly becoming our fastest-selling development.
WATES RESIDENTIAL CASE STUDIES
HULL EXTRA CARE PFI
Construction of 316 Extra Care apartments across three sites in Hull saw Wates Residential deliver this scheme in partnership with Riverside and Hull City Council. The £69.0m programme, due for completion in 2017, will provide residents with a balance of independence and privacy, with the knowledge that care is available as and when required.
Wates Residential commenced the redevelopment of the former Dudley Guest Hospital site in November 2015, having acquired the site from the Homes and Communities Agency. In total 157 new homes including 30 refurbished properties will provide a new lease of life for the historic site, alongside the full restoration of the locally listed porter’s lodge. Wates Residential will sell 118 of these homes on the open market, with the remaining 39 available for rent through Dudley Metropolitan Borough Council.