In an interview with ‘Development Finance Today’, Innes Smith, chief executive officer at Springfield Properties (pictured above), highlights the future challenges facing housebuilders, how Springfield Properties incorporates modern methods of construction and the current state of development funding.
How do you assess the current development funding space as an experienced housebuilder? Is it difficult to access funding?
We have raised funds from a variety of sources to support our developments. The key is to have the confidence of both investors and lenders. It is also important that market dynamics continue to favour housebuilders. Listing on the London Stock Exchange in 2017 meant we could access new capital. We raised £25m at the float and a further £15m from the public markets a year later to accelerate our growth, particularly through the development of our large-scale village sites and the acquisitions of Dawn Homes and Walker Group. But we also use borrowing facilities. This demonstrates not only readily available funding, but also a versatility in accessing funding in ways that will best unlock value for our shareholders.
What is the main obstacle to reaching the Scottish government’s goal of 50,000 affordable houses in the five years to 2021?
The target of 50,000 more affordable homes over five years to 2021 is ambitious, but achievable. To build more affordable and private homes we need to get the planning system right. In some places, it is too slow and acts as a drag on housebuilding. We are seeing some signs of improvement and believe an efficient planning system will stimulate the industry and the economy. We also need to make sure the industry has a steady supply of skilled workers, which is why Springfield has put so much focus on education and training. We currently have 22% of our staff in further education or working through an apprenticeship with Springfield.
What are the biggest challenges for housebuilders in 2019?
There is a great deal of speculation about the wider economic outlook in 2019, and both in the UK and globally there are trends and geopolitical tensions that present economic uncertainty. There is a lot of debate about the impact that Brexit might have, in whatever form it takes. So far, Brexit has not been a major issue for the Scottish housing market. Our focus is on keeping tight control of our costs and building the best homes possible for our customers, whatever the economic conditions. This approach meant we remained profitable during the 2008 downturn and emerged as a market leader. We are confident we will navigate any future uncertainty with equal success.
You recently completed a road made of waste plastic on a housing development. How else are you intending to make your developments more environmentally sustainable?
Springfield has always championed environmentally sustainable building practices. As a matter of course, we look for new ways to improve the environmental credentials of our homes. This ensures the longer-term sustainability of our projects and keeps down fuel bills for owners over the lifetime of the property.
We were also one of the first UK volume housebuilders to begin to include charging cables for electric car charging points as standard in our homes, making charging point installation easier for homeowners in the future. Air source heat pumps or energy-efficient boilers with gas saver units are used to heat homes, saving fuel and keeping running costs low. We even fit light tunnels in some of our homes to reduce the need for electrical lights to be used in hallways during the day, which also helps to keep running costs low.
On a wider scale, electric charging points have been installed at our offices, plastic use is discouraged, recycling is promoted in the offices and has been reviewed on site, resulting in a reduction in waste sent to landfill. These are great examples of innovation in the ongoing pursuit of our environmental goals.
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Do you have any interest in incorporating modern methods of construction into your future developments?
We build energy-efficient and high-quality homes for our customers. This requires constant innovation to be sure we are building the best homes possible. We use timber-frame construction, which we believe is the most sustainable method of building. It also allows us to manufacture precision-engineered kits in our own factory, it saves time on site and reduces costs for customers. We’ve recently improved the functionality of our kit factory in Elgin, which has increased production and efficiency.
We’ve added three more workstations, bringing the total to nine, installed a computerised saw and new air extraction system. We’ve also formed new walkways that have improved the flow of materials and workers around the factory. These improvements have increased the productivity potential of each workstation.
Our use of new technology is not restricted to construction. Through our Choices service, customers are provided with an online interactive opportunity to tailor their home to suit their needs, including high-quality kitchens and even the choice of an open or closed plan layout. By adopting modern methods on and off site, we can deliver the highest levels of consumer choice and the highest standards of construction.
How did you get into the industry?
As a youngster, I considered going into architecture for a time, so I guess I’ve always had an interest in building in one way or another. I started my career as an accountant, but for me it has always been more than just about the numbers. After graduating from Heriot-Watt University, I qualified as a chartered accountant with KPMG and then worked in a variety of industries, including engineering, aquaculture and carbon fibre manufacturing. I jumped at the chance to join Springfield. It’s a very ambitious company in a fascinating and important industry. Homes are a central part of people’s lives and building is a crucial part of our economy. Moving from financial director to chief executive felt like a natural progression. I enjoy seeing the bigger picture and how we work with customers, employees, investors and local authorities.
If you weren’t in the industry, what would you be doing?
Spending time with my wife and two children, getting out on the golf course and improving my guitar playing!
Source: Development Today
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