Chinese firm signs JV to build house-building factories in UK

Chinese construction company National Building Material Company (CNBM) struck a 2.75 billion pound ($3.41 billion) joint venture deal on Monday to open six cost-efficient house-building factories in the UK, capable of producing 25,000 homes a year.

The homes built by the joint venture will significantly reduce construction costs to a target of 400 pounds per square meter, significantly less than the 1,000 pounds per square meter average in the UK market. It came at an opportune time when the UK government is making policy plans to increase affordable homes.

CNBM is partnering with the UK’s housing association Your Housing Group (YHG) and renewable energy specialist Welink to construct the factories for pre-fabricated modular units. Of the total funding, 2.5 billion pounds is coming from CNBM and 250 million from YHG.

Shou Peng, chairman of CNBM, said: “The key to unlocking the opportunities to address the housing needs of the UK is through the development and delivery of an industrialization strategy at significant scale.”

The CNBM deal was welcomed by the UK’s International Trade Minister Greg Hands, who hailed it as an endorsement for the UK’s attractiveness for foreign investment.

“This announcement has the potential to benefit local communities across the country, creating jobs, boosting local economies and creating homes,” Hands said.

Stephen Haigh, chief executive of Your Housing and UK CEO of the joint venture, said the new project will help the UK government achieve their housing aspirations.

The deal came at a time when modular construction techniques are becoming a new buzzword in the construction industry. This technique produces standard room units inside factories which can readily be assembled on construction sites, to save construction time and costs.

China has led modular construction techniques by leveraging on its domestic housing market scale, and some Chinese firms have already expanded into the UK’s modular construction market, one example being the Shenzhen-based CIMC Modular Building Systems, having done over 10 UK projects for clients including InterContinental Hotels Group and Hilton.

The CNBM consortium partners are currently looking for factory sites across England. The first factory, in Liverpool, is expected to receive planning permission in January. A research and technology centre is currently being built in Gloucester by YHG to pioneer new development.

The project will deliver 2,000 homes next year, ramping up production after to 25,000 homes per year by 2022. The entire project is expected to create 1,000 new jobs.

The modular units to be made are base on designs by the Spanish firm Barcelona Housing Systems, unique for their energy efficiency and affordability.

The UK government announced in the November Autumn Statement its plans to create a 2.3 billion pound Housing Infrastructure Fund, to deliver infrastructure for up to 100,000 new homes in high demand areas.

Haigh added his team will work with local authorities, offering the consortium’s development model as solution to their house building and development needs.