REGENERATION

Midland regeneration specialist St Modwen Properties (SMP) has pledged to continue with the £750 million redevelopment of Longbridge despite posting half-year losses of £20 million – the first in its history.

Chief executive Bill Oliver said that despite the industry facing its toughest period since 1990 it was important that schemes such as that at Longbridge continued.

Four separate planning applications have been submitted to Birmingham City Council and Bromsgrove District Council for the regeneration of the 468-acre former MG Rover works.

The applications comprise 1.8 million sq ft of employment space, together with 1,980 new homes, a new town centre and extensive community facilities.

In addition, there will be a new learning quarter anchored by the £84 million Bournville College relocation.

“The applications for the college are in and we would hope that subject to planning permission, we can make a start next year ready for the college to be in use by 2011.

“We are pouring money into the site and the college will be a massive catalyst to the redevelopment – we can’t wait to get started,” said Mr Oliver.

However, the rapid decline in the residential market has caused the company to put a hold on the sale of its residential land portfolio.

“For residential land there is currently no genuine market, as the major housebuilders are unwilling to invest in land until they can see the way ahead more clearly.

“Therefore we have taken the decision not to attempt to sell any of our residential land until the market has stabilised,” said the firm in a statement on Monday.

As a result of the downturn, St Modwen wrote off £37.7 million from the book value of its residential sites, alongside £16.9 million from its commercial portfolio. This resulted in pre-tax losses of £20 million in the six months to May 31, compared with profits of £65.1 million a year earlier.

The company said: “We are reporting on what has been the most difficult period for the property industry since 1990.”

However, Mr Oliver said the picture in the commercial sector was more promising.

“There’s still a market,” he said, adding that occupier demand was holding firm across its portfolio especially in the food sector.
Elsewhere, the company said its development on the Quinton Business Park had enjoyed success and now only one 10,000 sq ft unit remained to be leased.

“Ironically considering the current climate, it’s had a better 2008 than 2007,” said Mr Oliver.

Construction work has also begun on the first phase of the Whitley Business Park in Coventry.

The land was acquired from Jaguar and Coventry City Council a year ago and the intention is to develop a 93-acre mixed use business park.

“That whole A46 corridor is very important to us and we great potential in the years to come,” added Mr Oliver.

He said the plan was now to manage the company on a cash flow basis to ensure it remained prosperous.

“The fallout in the housing sector has been sharp and severe and no one really knows for certain how long the period will be before things stabilise,” he said.

“We want to remain optimistic although things are going to be tough for a while.”

For this reason, he said developments such as Longbridge were vital to instill economic confidence in the region.

On a brighter note, he said one side effect of the decline in the housing sector was that builders were desperate for work.

“They are competing keenly on price and as a result, costs are down,” he said.