Construction firm announces flight to the suburbs

Construction firm announces flight to the suburbs (iStock)

Homebuilder Crest Nicholson has announced it is to shift its attention away from London, with its south-eastern work being focused on the home counties instead. 

The company has revealed it is closing its central London office amid ongoing concerns about the state of the property market in the capital. 

Stating that is its "less likely" to buy land in the metropolitan area in the next 18 months, the firm has moved its regional office to Kent and will now concentrate on the regions. 

Explaining the decision, chief executive Patrick Bergin said the company has already been "moving away from central London" over the past couple of years, due to an overheating market. 

However, he said, even in outer London "the pricing momentum is not with us, and absolute affordability is quite stretched".

The news saw Crest Nicholson's share price drop by over six per cent and other builders by lesser amounts, amid concerns that the news might herald an end to the recent boom in housebuilding. 

However, property investors might take a different view; after all, across the country as a whole Crest is still expanding its operations, ẃith more building in the Chilterns and Midlands.  That might suggest the firm is simply moving in line with what recent surveys have shown - that there is still plenty of strong growth, just not in London. 

Earlier this week the chairman of Knight Frank Alistair Elliott told the South China Morning Post that London is still a good longer-term prospect, but less so in the short term. All this, he noted, was because of the impact of Brexit. Even so, he suggested, the impact on investors of the knowledge that Britain will soon withdraw from the EU has not been nearly as severe as suggested.

Indeed, it may be that a combination of a market correction and Brexit, while making London a less attractive place to build in just now, will not prevent it from being a good investment prospect for those looking at long-term returns.