Berkeley to slow down investment as sales rates fall

Grant Prior 3 years ago
Share

Berkeley Group is looking to slow down development over the next two years amid economic uncertainty.

The house building giant highlighted its updated strategy in its half-year report to the City today.

Chief executive Rob Perrins said: “In the near-term, Berkeley will focus on matching production on existing sites to demand and delivering its forward sales over the period to 30 April 2025.

“Beyond this, the current operating environment, characterised by record levels of planning tariff within an increasingly complex and slow planning system, at a time of high build costs, increased regulation and higher corporation tax, alongside the Residential Property Developer Tax and proposed new Building Safety Levy, will inevitably continue to see a reduction in supply of new homes in London and the South East.

“Berkeley’s delivery of new homes will therefore result in a reduction in its land holdings.”

Sales during the current six-month period were 2% ahead of last year but since the end of September they were 25% lower than levels for the first five months of the financial year.

Berkeley said: “This is a resilient performance in the context of the current market volatility and reflects the strength and depth of demand in London.”

Cancellation rates also crept up from early-teens to around 20% in the last couple of months.

Berkeley made a pre-tax profit of £284.m for the six months to October 31 2022 from £290.7m last time while delivering 2,080 homes – 10% of London’s new properties.

Perrins said: “These robust results reflect the strength of Berkeley’s uniquely long-term operating model and the enduring appeal of high-quality homes and places within London and the South-East – a region which is the country’s most under-supplied market –  in spite of the uncertain and challenging operating environment.

“While Berkeley is ready and able to invest in new opportunities to increase delivery, we are positioning the business to reflect today’s environment until the conditions for growth are present to support responsible, sustainable investment. Future investment decisions will need to take into account the increase in corporation tax of 6%, the 4% RPDT and the proposed additional building safety levy designed to raise a further £3 billion from the industry. 

“We are experienced at operating in times like these and will focus on generating value from our existing assets with limited new investment, matching supply to demand and cash generation.

“London is the most beautiful and dynamic city in the world but is not currently attracting the necessary investment from private or public sources, including for infrastructure and affordable housing grant, to unlock more brownfield sites and address the systemic under-supply of new homes.”

 

Latest news

Hill hits record £90m profit as homes pipeline swells

Build-to-rent push and £4.8bn contracting book to fuel next growth phase
13 hours ago

Rayner unveils £39bn plan to build 300,000 social homes

Council building revival and rent reform feature in social and affordable homes plan
20 hours ago

Keltbray bounces back with £3.2m profit

Tighter controls and smarter project selection fuel strong turnaround
20 hours ago

VINCI JV wins 500-home twin town centre revamps

Chester Northgate phase 2 and Northwich Weaver Square schemes move to delivery stage
20 hours ago

80 energy projects unlocked as Ofgem backs grid expansion

£24bn energy networks deal gets green light from regulator
2 days ago

How to see your stories on the Enquirer

Join our Suppliers and Buyers directory to get your news published
20 hours ago

Henley lands Midland Mill revamp on Leeds tower scheme

Restoration of 18th-century mill kicks off on South Bank regeneration project
20 hours ago

New boss at Eric Wright Civil Engineering

Gavin Hulme takes top job as Diane Bourne moves to group role
1 day ago

Pinewood submits £1bn data centre plan

Studio giant adds green and learning spaces to tech hub blueprint
2 days ago

Record results after TClarke goes private

Britain's biggest M&E contractor flourishes after de-listing
2 days ago

Dalkia lands £200m nuclear maintenance deal

1,000 nuclear FM staff to join M&E contractor
2 days ago

Construction comeback to outpace wider economy

Arcadis forecast fueled by spending review optimism
3 days ago

First steel goes up on giant car battery site

Severfield gets to work on McAlpine Somerset site
3 days ago

Permasteelisa wins cladding deal on Bovis city tower

Facade specialist lands package at 60 Gracechurch Street
2 days ago

Fox buys recycled asphalt specialist Fisher

Acquisition adds major recycled asphalt capacity in north west
3 days ago

Major Building Safety Regulator shake-up to end tower delays

HSE stripped of control and top fire chiefs brought in to fast-track stalled schemes
3 days ago

Hinkley trio sign Sizewell civils deal

Balfour,Bouygues and Laing O'Rourke form Civil Works Alliance for new power station
3 days ago

£3.9bn data centre plan for Ravenscraig steelworks

Green energy to power massive new steel to silicon AI campus
3 days ago

Breakthrough on HS2’s second longest tunnel

8.4 mile Northolt to Old Oak Common drive completes
3 days ago

Neilcott on fast-track to debt-free employee ownership

£22.5m loan nearly paid down after big profit year
3 days ago

TfL kicks off race for £700m Tube station upgrade

South Kensington and Elephant & Castle top the pipeline list
3 days ago

Corbyn Plant Hire fleet goes under the hammer

Kit to be sold off by sister firm to collapsed groundworks contractor
3 days ago

Government wields procurement stick on late payment

New rules would block slow payers from bidding on big public jobs
6 days ago

Hercules buys power line labour firm for £15.7m

Labour supply specialist snaps up Advantage NRG to tap booming electricity upgrade market
6 days ago

Universal bid to fast-track planning for theme park

Entertainment giant eyes 2026 start at Bedford site
6 days ago

Developer Breck to transform former Ibstock brick factory

Ravenhead works to become 300-home development
6 days ago

SP Energy Networks awards contracts worth £1.4bn

First round of awards under £5.4bn national electricity grid upgrade programme
7 days ago

Travelodge to convert Liverpool Street office building

Office-to-hotel conversion in City of London
6 days ago

Plans lodged for 1m sq ft City of London office

Barbican landmark building will reuse 40% of existing structure
7 days ago

PTSG acquires roofing specialist HD Sharman Group

Premier Technical Services Group expands building maintenance division
6 days ago