The Investment Column: Fairview

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The Independent Online
OH, TO BE at the epicentre of the biggest housing boom since 1988 without being able to lay hands on a carpenter.

Fairview Holdings, a housebuilder and developer specialising in the London area, can't build homes fast enough to cope with the demands of the booming metropolitan economy.

Yesterday the company, which was demerged from Hillsdown Holdings last October, posted a solid 7 per cent rise in first-half profits to pounds 22.5m with the hint of much better things to come in the second half.

The shares responded by shooting to an all-time high of 151p, compared with a float price of 102p and low of 76p in December.

Is it possible that such go-go momentum can be maintained? London is now suffering from an acute shortage of skilled craftsmen, says Fairview's finance director Richard Westcott, particularly among carpenters, fitters and electricians.

There is also the perennial slog of getting planning permission for its large brownfield site developments.

Investors with long memories will recall that housebuilder shares went off a cliff nine years ago precisely because house prices had shot up to silly levels and then ran slap into a recession

But this time the ending may be different. Unlike in the last boom, those chasing property in London tend to be genuine buyers rather than speculators. That signals a more solid economic foundation than the Lawson-inspired bubble of the late 1980s.

For Fairview, which has a good land bank for future development, this outcome would ensure that it remains well placed in a growing market for some time to come.

On full-year profit forecasts of pounds 53m the shares trade on a meagre forward p/e of nine. The growth story for this company looks to have some way to run yet.