Crest Nicholson relies on strategy change: More value creation by focusing on private sales

The construction company Crest Nicholson is planning a strategic realignment to address the current decline in profits. The focus will be less on building low-margin properties such as affordable housing. According to the company, a 'transition phase' is planned, during which Crest Nicholson will attempt to withdraw from projects with lower profit margins. CEO Martyn Clark announced a stronger focus on private sales in the future to achieve better returns and higher margins. The most recent profit forecast for the past fiscal year up to October is at the lower end of expectations. Economists have long warned that the shortage of affordable housing in the UK is, among other factors, due to affordable housing being less profitable for construction companies. The Labour Party aims to build 1.5 million new homes in five years, which, according to the real estate company Savills, is only achievable with additional subsidies for affordable housing. This year, Crest Nicholson has built 1,873 homes, about 45% of which were classified as affordable or intended for the private rental market. This is below the government target of 50% and the 2,020 units of the previous year, with difficulties in private market sales attributed to 'affordability concerns.' Clark took the helm of the company in June as it rejected several takeover offers from rival Bellway. Recent interest rate cuts by the Bank of England have improved economic conditions for Crest Nicholson, according to Clark. The government's efforts to reform the planning system and enable more construction projects have also positively influenced the market environment.