Scottish housebuilder Springfield Properties said it was seeing signs of increased confidence and expects profit for the year to be significantly ahead of market expectations.

It has sold six sites in central Scotland in order to focus on new housing opportunities in the north of Scotland resulting from investment in the electricity network and the development of the Cromarty Firth Green Freeport.

It is estimated that around 5,000 workers will be required at the peak of the electricity installation in 2027. The freeport is expected to create more than 10,000 jobs with investment of more than £3 billion.

The Elgin-based company said total completions in the half-year to the end of November fell to 361 (H1 2024: 432), in line with management expectations, reflecting subdued market conditions.

However, the gross margin increased to 17.7% (H1 2024: 14.7%), due to profitable land sales and completion of legacy affordable contracts at the end of the prior financial year

Adjusted profit before tax increased by 90% to £3.8m (H1 2024: £2.0m), primarily reflecting the improvement in affordable housing gross margin, sustained focus on cost control and land sales.

It said long-term fundamentals of the Scottish housing market remain strong with the undersupply of housing across all tenures becoming more acute and greater private housing affordability than the UK as a whole.

The private housing reservation rate reduced from mid-December reflecting the subdued economy, but is currently experiencing signs of increased confidence following interest rate cuts.

Since the Scottish Budget in December 2024, affordable housing providers’ confidence has improved, it said, and two new contracts have been signed that will start in the current year.

The board has not declared an interim dividend (interim dividend 2024: nil) but remains committed to declaring a final dividend for FY 2025. 

Post-period it has sold 2,480 plots on six sites in central Scotland to BDW Trading, the principal operating subsidiary of Barratt Redrow, for £64.2m.

Proceeds from the sale will be received over four years and will accelerate plans to reduce the group’s outstanding bank debt and to capitalise on the significant growth opportunities emerging in the north of Scotland. The two companies have entered into non-binding talks on further possible sales of land.

Innes Smith, chief executive of Springfield Properties, said: “This profitable land sale will enable us to realise the value of our assets, accelerate our plans to remove bank debt and focus on the significant opportunity in the North of Scotland where we are uniquely positioned to excel.

“New housing is required to cater for the thousands of workers needed to deliver the substantial green infrastructure development coming to the region and the ongoing population growth as result of the economic stimulus these projects will bring.

“With significant land holdings across the Highlands and Moray and an established presence, we are excellently positioned to capitalise on this opportunity.

“In addition, we continue to have a large high quality land bank, with this deal demonstrating the long-term value of that asset.

“Accordingly, and with a significantly strengthened balance sheet, we continue to look to the future with confidence.”