By Jonathan Buck, Sven Grundberg And Jens Hansegard
LONDON—Skanska /zigman2/quotes/203551542/delayed SE:SKA.B -1.38% AB, the Swedish construction company that helped build such London landmarks as the "Gherkin" tower and the M25 ring-road, Thursday announced plans to enter the U.K. housing market.
The company, whose name adorns commercial construction sites across the country, currently is negotiating its first land deals and expects to initiate its first project next year. It hopes to be selling 800 homes a year by 2015.
"The financial crisis and the dramatic decline in the housing market have now created excellent opportunities for entry as a residential developer," Skanska said in a statement. The market has stabilized in the past year, and Skanska expects the recovery to begin in earnest in 2012, when it will start selling its first homes.
"I think it's a good time for Skanska to come to the market because land prices are low and house prices are low," said Magnus Andersson , who heads Skanska's project in the U.K. residential market.
Despite the economic downturn that crippled the market for residential property, there remains a shortage of housing in the U.K. The British government in 2007 drafted plans to build three million new homes by 2020, but that blueprint was scrapped during the recession, as housing sales evaporated when banks tightened up on lending and mortgages were harder to come by.
The impact on existing players of a new entrant into the U.K. housing market remains to be seen. Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV -1.98% PLC and Taylor Wimpey /zigman2/quotes/208623755/delayed UK:TW -0.39% PLC declined to comment on Skanska's move. "We welcome new entrants to the market to help tackle the country's significant housing shortage," said the Home Builders' Federation.
Skanska, which currently is also working on the London Crossrail project, has 50 years' experience in home construction. It is a leading developer in the Nordic region and has other residential operations in the Czech Republic and Slovakia. Thursday, it also announced its intention to enter the Polish market.
Mr. Andersson said that Skanska would focus its U.K. efforts on areas around London and the commuter belt, such as Cambridge. It will target developments that have potential for at least 150 units, and its range of products will include apartments, detached, semi-detached and terraced homes.
It will draw on its experience in the Nordic region and highlight its green initiatives, such as efficient energy solutions, which it expects to resonate with U.K. buyers.
Mr. Andersson added that Skanska would hire local expertise to negotiate complicated planning regulations, rather than trying to bring in workers from Scandinavia. "This is going to be a local business," he said.
He expected growth to be rapid and that the residential unit would grow from 10 employees now to 50 to 100 employees in the long term. Skanska currently employs about 4,500 workers in the U.K. and 49,000 world-wide.
"This is going to be a good addition to the current business," Mr. Andersson said.
Not everyone was so optimistic about Skanska's prospects of breaking into the U.K. residential market. "I think they will just get blown out of the water," said KBC Peel Hunt analyst Robin Hardy . "The idea that you can just turn up with money (and enter the market) is a fool's paradise."
Steve McGrath contributed to this article.