Joined
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Now I don't want you to feel sorry for these 'greedy' property developers, but I think it's only fair that we should feel their sense of pain. Sadly there will also be more worthy people hit by the credit crunch.
From Crains.
Developers feel pain as crunch hurts
Hurstwood settles £100,000 claim while Artisan and Ask cut jobs in face of downturn
By Simon Binns
Another week, more signs of strain among property developers and construction firms caught in the credit crunch.
Stephen Ashworth, the owner of Bolton-based property development group Hurstwood, is battling to contain problems caused by the collapse of the group's construction arm.
Hurstwood blamed problems at B&R Developments' Howard Town Mill scheme in Glossop as a factor in its construction arm going into administration.
Now subcontractors on the project have said they are preparing claims against another group company, Hurstwood Developments.
Duncan Munro of Esmanco Engineering, said he is owed more than £100,000 for work on the scheme which was being run by Hurstwood Construction until it went into administration last week.
Munro insists that letterheads, company numbers and company details on contracts he signed all related to Hurstwood Developments and said he intended to pursue the company for around £120,000 of outstanding monies.
The sum was enough to force him to place his 34 year-old Hadfield-based steelwork business into receivership last week.
Asset-rich
Ashworth told Crain's on Friday he had just settled a six-figure claim issued against Hurstwood Developments by Manchester-based architect Buttress Fuller Allsop Williams.
He said he expected subcontractors to “have a pop” at other parts of the Hurstwood business which were more asset-rich but said that ultimately the liabilities for the scheme lay with Hurstwood Construction.
He added that the rest of the business remained sound and described main funder Royal Bank of Scotland, with whom a £24m package was agreed last year, as “wonderful”. He said the group “hadn't breached one banking covenant” and added that all five of its main lenders were not only supportive but also “looking at new business”.
B&R Developments, meanwhile, said the blame for Hurstwood Construction's demise could not be attributed to its project.
A spokesman said that it had offered the contractor “a substantial ex-gratia payment of £381,000 over and above Hurstwood' s entitlement” just to get the scheme finished.
Ashworth said that conditions attached made the offer “inequitable”.
Elsewhere in the property sector, other companies are feeling the strain. Manchester-based Artisan Property Group has parted company with deputy chief executive Jason Millett and his brother, Peter Millett, who was construction director.
Jason Millett's personal assistant, Jane Wright, has also left the company. The departures follow the resignation of finance director Paul Deehan at the beginning of June.
In a statement, the company said founder Carol Ainscow had taken steps to “reshape Artisan Property Group for the current economic climate”.
The company is closing down its construction business and will now use outside contractors.
Ainscow's statement added: “Several senior management posts have been axed in recent weeks with no plans to reinstate them in the foreseeable future.
Turnaround
“The current slowdown in the industry has not surprised me, but I firmly believe there will be a turnaround soon. However, major construction experience and practices are not appropriate.
“We are currently looking closely at the use of agency workers and sub-contractors. Artisan needs to become a tighter operation.”
According to people familiar with the situation, Barratt Homes has pulled out of its BASE partnership with Artisan, which was due to build almost 3,000 affordable homes in West Gorton and Hattersley.
The Manchester office of Rok Developments has also seen staff cuts, losing all but managing director Stuart Longbottom and one other. The company had employed around 10 people until late last year.
“The development arm does still have a future,” said Longbottom. “But we have had to let staff go.” The developer has failed to attract any tenants to its Wilmslow Office Park scheme.
Dandara has made around ten redundancies since the end of last year, blaming the difficulty for buyers in obtaining mortgages.
David McLean Homes is also set to close its North West office in Runcorn and move regional operations back to its head office in Deeside, Flintshire.
Several sources close to Ask Developments said the company has made a handful of redundancies in its residential division.
-------------------------------
Slump fills auction houses with bargains
By James Chapelard
Property auctioneers are being hammered by the buy-to-let slump but those specialising in insolvency work are taking on new staff and more space to cope with an increasing volume of bankrupt stock passing through their sales rooms.
In particular they report a surge in the number of clothes retailers and double glazing firms going out of business.
Peter Davies, senior director at Stockport-based auctioneers and valuers Philip Davies & Sons is taking on new staff to cope with the extra business.
So far he says he has seen small to medium businesses go under but anticipates larger companies will soon be in trouble. He said: “We are very busy at the moment but we have not got any high profile stuff for now. It is all smaller businesses. We are numerically up on last year. Our turnover will go up.
“We anticipate that we will be busy in the next 12 months to two years. We are buoyant. We work in a reverse economy. When times are bad we are busier.”
Extra staff
Robson Kay, the Baguley-based valuers and auctioneers, anticipate that turnover will be up by at least 30 per cent on 2007. The firm is expected to take on five extra staff in the coming months to cope. Director Jonathan Kay said he had sold repossessed assets from opticians, clothes shops, double glazing firms and restaurants in recent months.
He added: “We are extremely busy. We are looking for more valuers to work for us to cope with the volume of work. In 2007 we took 340 instructions. So far we have had 215 this year. By the end of 2008 we should be in the region of 500.”
Although Kay said the firm was making more fees from the increased volumes it was harder to maximise returns for clients because assets were worth less compared to last year. He said to increase returns he was having to go further afield to get higher prices.
He added: “We have to look at buyers in other countries where they are not as badly hit. We will get more for sewing machines abroad, for example.”
David Goodman, of Miles Platting-based furniture auctioneers Ian Michael, said he was getting more surplus items direct from furniture retailers because they are fearful of being left with too much stock. But the number of customer returns was down because sales are lower.
He said: “The number wanting to buy at auction does not increase as the economy gets worse. We are turning the same amount of stock but prices are lower.
“There is not a massive increase in business. You need an end user. The money is not there if you are a retailer or customer.”
----------------------------
Housing market shows lack of movement
Removals firms look to office and storage companies to provide work as demand drops
By James Chapelard
The sluggish state of the housing market is taking its toll on removal firms in Greater Manchester, who estimate that demand has nearly halved since this time last year.
Many are offering cut price deals in the face of hot competition for fewer and fewer house moves.
The industry is suffering so much from drying demand that some firms have had to lay off staff or put workers on part-time contracts.
The sector, which is highly fragmented with many small firms and national operators, is usually at its busiest in the run up to summer but firms are reporting a drop in business of 40 to 50 per cent compared to 2007.
David Garlick, director of family-owned Stockport firm A Houghton, said he had considered laying off staff. “This year we have seen a downturn in house moves, so I am going to see if I can get back into office and factory clearance.
“It is very difficult. Prices have come down by about 10 per cent. People are saying to customers ring me back and we will see if we can beat the quote.”
Chris Fleming, from Warrington-based Chris Fleming Removals, said companies were fighting for every scrap of business. He said: “We are quiet. We have had to put permanent staff on part-time. There are lots of removal companies out there and they are tendering for fewer jobs. Some companies are operating under cost.
“They are losing money on some jobs just to win the business. We are down 50 per cent.”
Mike Brown from Sale-based MBT Removals said he had carried out 70 per cent fewer estimates compared to May 2007.
He said: “It's pretty dire. There are men out of work. If you are not getting the phone calls you don't get the work.”
Trafford Park-based Britannia Bradshaw has posted a notice on its website offering a 20 per cent discount on removals carried out in June. It says this is “due to the current UK housing market”.
Figures from the Land Registry on house sales in Greater Manchester make grim reading for removal firms. In June 2007 almost 6,000 homes were sold compared to just 2,884 in February 2008, the latest figures available.
Housebuilder Bellway said this week it expects to sell 10 to 15 per cent fewer homes in the year to July, with the sales in the North of England the worst hit. The company said net reservations since the beginning of February were 31 per cent lower than last year.
Mortgage approvals in April fell to the lowest level in nine years and house prices fell 2.5 per cent. Analysts at UBS are predicting a house price fall of 15 to 20 per cent.
Paul Swindon from the British Association of Removers said members were sustaining themselves by concentrating on storage and office removals but he admitted the sector was facing a tough time.
He said: “We hope it is turning a corner. Many of our members get involved in storage. That is sustaining them through this period to make sure businesses keep operating.”
From Crains.
Developers feel pain as crunch hurts
Hurstwood settles £100,000 claim while Artisan and Ask cut jobs in face of downturn
By Simon Binns
Another week, more signs of strain among property developers and construction firms caught in the credit crunch.
Stephen Ashworth, the owner of Bolton-based property development group Hurstwood, is battling to contain problems caused by the collapse of the group's construction arm.
Hurstwood blamed problems at B&R Developments' Howard Town Mill scheme in Glossop as a factor in its construction arm going into administration.
Now subcontractors on the project have said they are preparing claims against another group company, Hurstwood Developments.
Duncan Munro of Esmanco Engineering, said he is owed more than £100,000 for work on the scheme which was being run by Hurstwood Construction until it went into administration last week.
Munro insists that letterheads, company numbers and company details on contracts he signed all related to Hurstwood Developments and said he intended to pursue the company for around £120,000 of outstanding monies.
The sum was enough to force him to place his 34 year-old Hadfield-based steelwork business into receivership last week.
Asset-rich
Ashworth told Crain's on Friday he had just settled a six-figure claim issued against Hurstwood Developments by Manchester-based architect Buttress Fuller Allsop Williams.
He said he expected subcontractors to “have a pop” at other parts of the Hurstwood business which were more asset-rich but said that ultimately the liabilities for the scheme lay with Hurstwood Construction.
He added that the rest of the business remained sound and described main funder Royal Bank of Scotland, with whom a £24m package was agreed last year, as “wonderful”. He said the group “hadn't breached one banking covenant” and added that all five of its main lenders were not only supportive but also “looking at new business”.
B&R Developments, meanwhile, said the blame for Hurstwood Construction's demise could not be attributed to its project.
A spokesman said that it had offered the contractor “a substantial ex-gratia payment of £381,000 over and above Hurstwood' s entitlement” just to get the scheme finished.
Ashworth said that conditions attached made the offer “inequitable”.
Elsewhere in the property sector, other companies are feeling the strain. Manchester-based Artisan Property Group has parted company with deputy chief executive Jason Millett and his brother, Peter Millett, who was construction director.
Jason Millett's personal assistant, Jane Wright, has also left the company. The departures follow the resignation of finance director Paul Deehan at the beginning of June.
In a statement, the company said founder Carol Ainscow had taken steps to “reshape Artisan Property Group for the current economic climate”.
The company is closing down its construction business and will now use outside contractors.
Ainscow's statement added: “Several senior management posts have been axed in recent weeks with no plans to reinstate them in the foreseeable future.
Turnaround
“The current slowdown in the industry has not surprised me, but I firmly believe there will be a turnaround soon. However, major construction experience and practices are not appropriate.
“We are currently looking closely at the use of agency workers and sub-contractors. Artisan needs to become a tighter operation.”
According to people familiar with the situation, Barratt Homes has pulled out of its BASE partnership with Artisan, which was due to build almost 3,000 affordable homes in West Gorton and Hattersley.
The Manchester office of Rok Developments has also seen staff cuts, losing all but managing director Stuart Longbottom and one other. The company had employed around 10 people until late last year.
“The development arm does still have a future,” said Longbottom. “But we have had to let staff go.” The developer has failed to attract any tenants to its Wilmslow Office Park scheme.
Dandara has made around ten redundancies since the end of last year, blaming the difficulty for buyers in obtaining mortgages.
David McLean Homes is also set to close its North West office in Runcorn and move regional operations back to its head office in Deeside, Flintshire.
Several sources close to Ask Developments said the company has made a handful of redundancies in its residential division.
-------------------------------
Slump fills auction houses with bargains
By James Chapelard
Property auctioneers are being hammered by the buy-to-let slump but those specialising in insolvency work are taking on new staff and more space to cope with an increasing volume of bankrupt stock passing through their sales rooms.
In particular they report a surge in the number of clothes retailers and double glazing firms going out of business.
Peter Davies, senior director at Stockport-based auctioneers and valuers Philip Davies & Sons is taking on new staff to cope with the extra business.
So far he says he has seen small to medium businesses go under but anticipates larger companies will soon be in trouble. He said: “We are very busy at the moment but we have not got any high profile stuff for now. It is all smaller businesses. We are numerically up on last year. Our turnover will go up.
“We anticipate that we will be busy in the next 12 months to two years. We are buoyant. We work in a reverse economy. When times are bad we are busier.”
Extra staff
Robson Kay, the Baguley-based valuers and auctioneers, anticipate that turnover will be up by at least 30 per cent on 2007. The firm is expected to take on five extra staff in the coming months to cope. Director Jonathan Kay said he had sold repossessed assets from opticians, clothes shops, double glazing firms and restaurants in recent months.
He added: “We are extremely busy. We are looking for more valuers to work for us to cope with the volume of work. In 2007 we took 340 instructions. So far we have had 215 this year. By the end of 2008 we should be in the region of 500.”
Although Kay said the firm was making more fees from the increased volumes it was harder to maximise returns for clients because assets were worth less compared to last year. He said to increase returns he was having to go further afield to get higher prices.
He added: “We have to look at buyers in other countries where they are not as badly hit. We will get more for sewing machines abroad, for example.”
David Goodman, of Miles Platting-based furniture auctioneers Ian Michael, said he was getting more surplus items direct from furniture retailers because they are fearful of being left with too much stock. But the number of customer returns was down because sales are lower.
He said: “The number wanting to buy at auction does not increase as the economy gets worse. We are turning the same amount of stock but prices are lower.
“There is not a massive increase in business. You need an end user. The money is not there if you are a retailer or customer.”
----------------------------
Housing market shows lack of movement
Removals firms look to office and storage companies to provide work as demand drops
By James Chapelard
The sluggish state of the housing market is taking its toll on removal firms in Greater Manchester, who estimate that demand has nearly halved since this time last year.
Many are offering cut price deals in the face of hot competition for fewer and fewer house moves.
The industry is suffering so much from drying demand that some firms have had to lay off staff or put workers on part-time contracts.
The sector, which is highly fragmented with many small firms and national operators, is usually at its busiest in the run up to summer but firms are reporting a drop in business of 40 to 50 per cent compared to 2007.
David Garlick, director of family-owned Stockport firm A Houghton, said he had considered laying off staff. “This year we have seen a downturn in house moves, so I am going to see if I can get back into office and factory clearance.
“It is very difficult. Prices have come down by about 10 per cent. People are saying to customers ring me back and we will see if we can beat the quote.”
Chris Fleming, from Warrington-based Chris Fleming Removals, said companies were fighting for every scrap of business. He said: “We are quiet. We have had to put permanent staff on part-time. There are lots of removal companies out there and they are tendering for fewer jobs. Some companies are operating under cost.
“They are losing money on some jobs just to win the business. We are down 50 per cent.”
Mike Brown from Sale-based MBT Removals said he had carried out 70 per cent fewer estimates compared to May 2007.
He said: “It's pretty dire. There are men out of work. If you are not getting the phone calls you don't get the work.”
Trafford Park-based Britannia Bradshaw has posted a notice on its website offering a 20 per cent discount on removals carried out in June. It says this is “due to the current UK housing market”.
Figures from the Land Registry on house sales in Greater Manchester make grim reading for removal firms. In June 2007 almost 6,000 homes were sold compared to just 2,884 in February 2008, the latest figures available.
Housebuilder Bellway said this week it expects to sell 10 to 15 per cent fewer homes in the year to July, with the sales in the North of England the worst hit. The company said net reservations since the beginning of February were 31 per cent lower than last year.
Mortgage approvals in April fell to the lowest level in nine years and house prices fell 2.5 per cent. Analysts at UBS are predicting a house price fall of 15 to 20 per cent.
Paul Swindon from the British Association of Removers said members were sustaining themselves by concentrating on storage and office removals but he admitted the sector was facing a tough time.
He said: “We hope it is turning a corner. Many of our members get involved in storage. That is sustaining them through this period to make sure businesses keep operating.”
If I can fine any new info I'll post it.
