Watkin Jones has revealed that a ‘challenging market backdrop’ has impacted its half-year results, but the residential developer and operator said it was working to ensure it is well-placed to exploit opportunities when the market improves.
Adjusted pre-tax profits fell to just £0.2m, compared with a profit of £3.4m previously, though statutory results showed a pre-tax loss of £0.9m, down from a profit of £2.1m before, due to a £1.1m exceptional finance cost related to the unwinding of the discount rate on a Building Safety provision. Revenue reduced to £129.2m from £175.1m the previous year.
Operationally, the group’s businesses have continued to perform well, with their developments on site progressing in line with expectations.
Revenues from purpose-built student accommodation (PBSA) were lower at £25.6m, compared to £61m previously. This reflects the benefit of the forward sale in the prior year of the Gas Lane scheme, offset by continued strong build progress from other live schemes.
PBSA gross profit for the period was £3.9m compared to £7.1m in 2024, with gross margin for the period increasing to 15.2% from 11.6% in 2024. This is a benefit from their live schemes remaining on-programme and on-budget.
Key milestones during the period included signing new development partnerships for schemes in Southwark and St Helens, alongside the acquisition of a new site, subject to planning, to bolster its pipeline. Planning applications were submitted for an additional 722 PBSA and co-living beds across two schemes.
Looking ahead, Watkin Jones remains cautiously optimistic. The company aims to deliver its in-build projects, manage costs and cash flow, and diversify its revenue streams. Planning applications were submitted for an additional 722 PBSA and co-living beds across two schemes.
As of 31 March 2025, the group holds approximately £270m in forward-sold revenue, with £105m expected to be delivered in the second half of the year.
The medium-term outlook for both the PBSA and Build to Rent markets remains strong, supported by robust sector fundamentals. While market conditions are expected to improve with a recovery in UK economic sentiment, Watkin Jones continues to focus on operational resilience and strategic growth opportunities.
“I am pleased to report that trading in the first half was in line with our expectations, despite the continuing challenging market backdrop, as a result of our focus on operational delivery, cost management and cash generation. Our in-build schemes continue to trade in line with our previous guidance, and the two new development partnerships secured in the period demonstrate our ability to be proactive and innovative in deploying our market-leading skills and experience in constructing and refurbishing residential for rent real estate.
“We continue to actively market and engage with investors on our development opportunities which are attracting interest, supported by the attractive fundamentals of the PBSA and BTR sectors in which we operate. Whilst transactional activity remains slow and subject to a continuing volatile market backdrop, we are encouraged by signs of improving sentiment and are focussed on ensuring that the Group remains in the best position to exploit opportunities as conditions improve.”
Alex Pease, Chief Executive Officer, Watkin Jones
