Boost for modular housing construction

Image Source: Urban Splash

Modular housing work is gaining pace with a series of new deals that are providing a boost for offsite manufacturing in the residential sector.

Ilke Homes has won what is believed to be the biggest single modular housing contract with a £100 million deal to supply 750 modular homes for social housing giant, Places for People (Glenigan Project ID: 19181842).

Ilke chairman Dave Sheridan said: “Ride-hailing apps have replaced standing in the rain to flag taxis, so it makes sense that we embrace the benefits of manufacturing homes in dry factories. A mature OSM [off site manufacturing] market could create an “Uber moment” for construction, speeding up delivery, cutting cost and giving our customers unrivalled choice and quality.”

Ilke is a joint venture between housebuilder Keepmoat and offsite specialist Elliott Group and only opened its 25,000 sq m factory opens in Harrogate last year.

Glenigan’s construction research shows that Ilke is working on a number of other developments including 119 units at Millwood in Liverpool  Glenigan Project ID: 17005870) and 54 homes at Firs Farm in West Sussex (Glenigan Project ID: 18435714).

Urban make a Splash

The Ilke deal followed an announcement that Urban Splash, which also only moved into modular housing last year, has formed a partnership with Japan’s biggest housebuilder, Sekisui House.

Sekisui House have invested £22 million of new equity in return for a 35% stake in Urban Splash’s modular business, House.

A further £30 million of equity and debt funding will come from the Government’s Home Building Fund, which is administered through Homes England.

Sekisui House president Yoshihiro Nakai, said: “Using modern methods of construction to build high quality homes with short build times is one of our company’s great strengths. Our technology and know-how can help resolve pressing social issues in the UK.”

Manchester-based residential developer Urban Splash moved into modular housing with last year’s acquisition of the loss-making Building Systems business from materials group SIG.

Building Systems had revenue of £9.2 million in 2016 but lost £5.7 million and Urban Splash paid just £1 in a deal which included a factory employing 70 staff at Alfreton in the East Midlands.

Just weeks after confirming the Sekisui deal, Urban Splash announced a £75 million deal to supply 440 modular homes for Homes England at Northstowe (Glenigan Project ID: 1903816).

Other players

Insurance company Legal & General is also investing modular housing and has built a factory outside Leeds that will be churning out more than 3,000 homes a year by 2022, mainly for the affordable housing sector.

“Affordable housing is a classic example of under-investment with minimal new equity capital being deployed to the sector,” said L&G chief executive Nigel Wilson last year.

Persimmon’s modular housing business Space4 is also expanding. Space 4 delivers around delivered 6,000 timber frame house kits and insulated roof systems to Persimmon’s housing businesses form a factory at Castle Bromwich near Birmingham.

Production is now being expanded to 9,500 units per year- 7,750 timber frames and 1,750 roof systems, providing further evidence of the increased demand for modular housing as skills shortages bit in the run-up to Brexit.