Bam Construct eyeing move into modular residential
24 May 2021 By David Price
Bam Construct is considering a shift into the residential market with a modular offering.
The contractor is looking at how it could capitalise on what it expects to be strong, long-term demand in the residential market. At this stage it is considering working with the public sector and housing associations as well as potentially alongside private developers. The firm has traditionally focused on commercial and public sector building projects.
Chief executive James Wimpenny told Construction News that the firm is also looking at how it could use the offsite capabilities of the wider Royal Bam group in the UK market: “We are having a good look at it because we think it’s going to be a long-term market,” he said. “What we’re trying to do is figure out where there is a place in the market for a more sustainable, modular-type solution, rather than the traditional-type stuff,” he added.
Royal Bam has businesses in Ireland and the Netherlands that currently produce modular elements for housing. “There’s a lot of experience in the business around that,” Wimpenny said.
Skanska UK made a similar move in 2019 when it brought BoKlok – the group’s modular housing tie-up with Ikea – over to the UK. It is currently working on its first scheme of 200 houses in Bristol.
Wimpenny added that it was “early days” for any potential residential market moves. “We see that as an area worth exploring, alongside what we traditionally do,” he said.
He highlighted the healthcare market and schools segment of the education sector as being expected to remain strong. He also noted that he expected more work upgrading and decarbonising existing buildings to come through: “It’s not just about building all the new things, it’s about upgrading some of the stock that we’ve already built,” he said.
Demand in the market has largely recovered since the pandemic first struck, but is not booming yet. “I wouldn’t say it’s a hot market for new work. I would say it’s probably similar to where it was before the pandemic,” he said.
There is still an elevated level of uncertainty around new work and whether projects coming to market would actually go ahead in near future, he added. “Are they all real? Are they just people dusting things off and thinking, ‘We'll go through our pricing process and we'll see where we get, and if the price is too high, we'll shelve it again’? That's always the difficult bit that we can only give our best guess about what that looks like.”
Wimpenny said the company had been on course to record around £1bn in turnover in 2019 before the pandemic struck. Revenue was knocked down 15 per cent to £793.1m last year from £930.5m in 2019. He said the company could return to that £1bn mark in the near future, but emphasised that growing profit margin was more important. Bam Construct’s pre-tax margin for 2020 was 1.7 per cent, up from 1 per cent in 2019, when it made a large provision.
Bam Construct ended the year with an order book of £1.47bn, up from £1.4bn at the end of 2019.