Luxury homes developer to go into administration

Work stopped yesterday in Glasgow at the two remaining Applecross sites not mothballed by the builder earlier in the year – the 159-home development at the former BBC Scotland HQ in Queen Margaret Drive and another site for luxury homes in the Williamwood area.

The company is understood to have collapsed after Applecross fell into significant debt triggered by the plummeting housing market.

It was not known last night whether any of the company's 45 staff will lose their jobs – or whether work will recommence on the mothballed sites.

Applecross, which was founded in 1979 by Colin Cumberland and Graham Aggett, specialises in luxury apartment developments, with an average selling price last year of 430,000.

A period of recent rapid expansion was described by a source close to the housebuilde as "extremely bad timing".

The main expansion was funded by a 70 million debt facility provided by Bank of Scotland in 2006.

The developer admitted to The Scotsman late last year that it would post a loss for the 12 months to the end of September 2008 and said it was looking to move from its luxury Edinburgh Park headquarters into a smaller office space.

Managing director Colin Cumberland said:

"We are hopeful that someone will buy the assets and the Applecross name will continue."

It is understood that Applecross stopped work on almost all of its sites in the final quarter of 2008 to concentrate on selling off its stockpile of completed properties. It experienced a 60 per cent drop in sales volumes in the last half of 2008 as consumers found mortgages harder to come by.

The builder subsequently attempted to generate cash in other ways: turning to letting out properties it acquired through part-exchange, rather than attempting to sell them in the slow housing market.

A company source said: "They were deeply in debt on the basis that they had a very basic case of bad timing.

"The company started a very aggressive expansion plan for the first time in its entire history – they had pottered along in a fairly safe way until then. But the moment they got even slightly ambitious, the timing was just all wrong and it all fell down around their ears."

The source added that some of Applecross's management team were disappointed with Bank of Scotland for failing to support them through the downturn.

The source said: "For them not to take a longer-term view and support them through this period – they were disappointed about that…"

But Mr Cumberland defended Bank of Scotland, saying: .

"The bank has been supportive, but the long duration of the credit crunch has left us with no alternative."

Mr Cumberland founded Applecross in 1979 with Graham Aggett after the pair came up with the idea when working as quantity surveyors in Saudi Arabia on the Mecca Water Supply project.

He had been sent a copy of The Scotsman property section and noticed the price of property in Edinburgh rising and decided to cash in.