Retirement homes builder outpaces housing market |
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Sat, 10 Sep 2005 19:05
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‘Specialisation pays’, seems to be the moral of the story here as McCarthy & Stone said business results for the full year ending August 31 would be “satisfactory”. While the rest of the property market appears to be overcast with gloom, this builder of retirement homes has managed to shine with better-than-expected performance.
The firm sold 1,983 units with an average selling price of £163,500. Although sales were down 3.5 percent from last year’s 2,055 units, it is still way above the 10 percent decline in annual sales the firm had warned about in July. Performance had simply exceeded the expectations of analysts and the building industry.
The firm admitted that the sales were driven by a more aggressive use of incentives and allowances. Despite margins thinning due to increased incentives, the firm had managed to push average selling price up 6 percent on the last full year’s average.
A senior analyst said McCarthy & Stone’s performance was easy to understand. The niche market of retirement homes is relatively untapped as yet. It continues to show good prospects, especially for long term investment plans. With few rivals, McCarthy & Stone were enjoying an enviable 65 percent share of this market.
Most analysts said they could expect McCarthy & Stone’s full-year pre-tax profits to be over £125 million.
Meanwhile, the firm is reported to have increased use of part exchanges in order to shorten the buying chains for pensioners. Part-exchanges are companies specialising in trading secondhand houses. Along with other efforts like paying the estate agent’s fees and discounts, part exchanges have helped reduce the decline to 3.5 percent which could have otherwise have been as bad as every other housing company’s performance during the past many months.
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