Morgan Sindall said in a trading update to the Stock Exchange that it will increase spend at its regeneration subsidiary Muse Developments as development activity resumes.
The Salford Quays-based northern office of Muse has major town centre schemes proposed, mainly with public sector partners, in Warrington, Chester, Stockport, Manchester Victoria, Blackpool and Salford.
The trading statement said: "Urban regeneration continues to deliver good progress on the schemes in its portfolio. We continue to see long-term value in the urban regeneration market with a regeneration pipeline of £1.8bn."
The directors added that they were 'increasing investment in our regeneration activities and as a result we expect the group to move into a position of average net debt this year.' The group previously operated with no debt.
The construction and infrastructure division, Morgan Sindall, is trading in line with expectations although margin pressure continues.
Overbury, the fit-out subsidiary, 'continues to be impacted by the lack of major project opportunities although the pipeline of smaller refurbishment projects remains reasonable.'
Lovell, the affordable housing business, suffers from the 'ongoing constraint of mortgage availability…resulting in volumes being similar to 2011.'
Shares in Morgan Sindall fell 16p to 598p.