BUILDING giant Kier has highlighted the challenges firms face in the Aberdeen area amid the fallout from the North Sea oil and gas downturn but said it is achieving good growth in Scotland.

Gordon Reid, business development manager of the group’s construction arm, said private sector activity had dried up in Aberdeen with work on all but a handful of office projects stopped.

“Everything else that was in the pipeline has been stopped because of the fall in the oil price,” he said.

Kier put in bids for three commercial projects in Aberdeen that have been placed on hold. It is working on an £11m student accommodation project in the city.

The comment provides further evidence of how the drop in activity in the North Sea following the oil price fall is impacting the wider Aberdeen economy.

However, Mr Reid, said the construction arm is much busier in Scotland than it was a year ago.

“The pipeline of what we’ve got going through is significantly better than it was,” he said. Employee numbers have increased to 200 from 120 over the last 12 months.

Mr Reid said private sector activity is much stronger in areas such as Glasgow and Edinburgh than in Aberdeen.

But growth has been driven by the company’s success in winning public sector work in areas including North East Scotland.

Kier is working on a range of education projects including the £43m William McIlvanney Campus in Kilmarnock and the £13m Caol Campus in Fort William.

Mr Reid said there is no sign of activity slowing in spite of big cuts in public spending.

“We see a very healthy pipeline going forward for the next two to three years,” he said.

Kier recently won a £17m contract with NHS Grampian for maintenance work at Aberdeen Royal Infirmary.

Kier’s property arm has taken stakes in projects such as the £10m Clifton Place student housing development in Glasgow.

The housing arm is working on three Central Belt developments. It said the appetite for properties has improved over the last 6 months.

Kier’s chief executive Haydn Mursell, said: “In the UK, our core markets are improving which provides a platform for growth, particularly for our property, residential and regional building businesses, and over the medium-term for our infrastructure businesses.”

The group grew underlying pre-tax profits 19 per cent, to £44.2m, in the six months to 31 December, against £37m in the first half last time.

Revenues increased 31 per cent, to £2.1bn from £1.6bn.