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Upmarket housebuilder Cala on course to double in size by 2017

UPMARKET housebuilder Cala Group has said it remains on course to double in size by 2017, as home and land prices creep upwards.

CONFIDENT: Cala expects to gain from a solid land bank around Aberdeen where new homes are in demand.
CONFIDENT: Cala expects to gain from a solid land bank around Aberdeen where new homes are in demand.

Organic growth around the UK forms the major part of the expansion plan but Alan Brown, chief executive, highlighted the Aberdeen market and the south of England as two areas where more rapid gains were expected.

As part of that, two new divisions, one focused on counties to the north of London and the other covering regions to the south, are being formed for the south of England.

Mr Brown said Cala had a good land bank around Aberdeen and was positive about the prospects in the Scottish market as a whole.

He said: "We have seen strong performance on the sales side throughout Scotland in the past six months. Aberdeen is a particular hot spot as everyone knows.

"It is an economic environment all of its own, very much based on the energy sector.

"In the west of Scotland we are seeing prices rise and a lot more people out and about buying. The Scottish market is definitely in a more positive place than it has been for a while."

The west of Scotland division is predicted to grow its revenue by 70% across the next three years with the north and east sections expected to double in size by 2017.

Mr Brown indicated the company, acquired by Patron Capital Partners and Legal & General in March 2013, remained active across the UK and had seen a 16% increase in the value of its land bank since July.

It now stands at a total of 10,770 plots with a gross development value of £3.6 billion. Mr Brown suggested 95% of the land Cala needed to meet its growth objectives was already in place.

He said: "If you take the land we have bought in the past six months, build on it and sell all the homes on it then it [has a value of] £681 million.

"Compared to last year, when turnover was around £250m, we have effectively contracted on six times more land than we need to get that growth we want.

"We are now in a position where we have 95% of the land we need already under contract."

The company has added 60 staff across its regional office, an increase of around 15%, in recent months and Mr Brown said the intention was to keep "heavily recruiting".

He said: "That does not account for the increased amount of sub-contractor labour we have across the site. If we are increasing the size of our business by two-and-a-half times then you would expect to increase the size of our labour force [by the same amount].

"That will be an increase from around 1000 people to 2500. We will have recruited something in the region of 150 workers in the past six months and will continue to do that as the business grows."

Average prices in the period between the start of July last year and the end of January had increased 4.9% to £361,000.

The company said its average weekly sale rate was 0.5 per site.

Although Cala is seeing little direct impact from the Help to Buy scheme Mr Brown acknowledged the support mechanism was providing the means for more people at different levels of the market to move house.

He said: "Even though we have been through a tough period, there will be plenty of people who would have wanted to move. Now they are a bit more confident and out there and buying which is hugely positive."

Mr Brown praised the Bank of England's amended forward guidance policy suggested it showed the central bank was alive to the changing nature of the economy rather than slavishly tied to putting interest rates up when one indicator was hit.

He said: "It goes to show that someone has a steady hand on the tiller and that is all that anyone in any industry ever wants."

When asked whether Cala was making any plans ahead of the Scottish independence referendum he said: "Our customers buy our homes because they are the right product in the right location.

"Where we build and what we build will continue to be determined by where we know the market demand is. I don't think Scottish independence has any impact on that."

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