Wednesday, February 28, 2024
HomeinvestingBerkeley Group Stays Resilient Amid Concerns of a Sluggish UK Housing Market

Berkeley Group Stays Resilient Amid Concerns of a Sluggish UK Housing Market

Published on

Interview with an Anonymous Billionaire’s Son: Navigating Wealth and Responsibility

'ABS' is pictured above, with the promised anonymity on face and location. FinanceNews.co.uk (FN): Today, Mel Kern has a unique opportunity to speak with an...

Berkeley Group, a prominent British high-end developer, has confirmed its profit forecast despite a challenging trading environment. The company, which is listed on the FTSE 100, reported a 35% decrease in private sales reservations in the first four months of its current fiscal year compared to the same period last year. The slowdown in the housing market has been attributed to higher borrowing costs and wider macro-economic concerns, along with the Bank of England’s efforts to control inflation through interest rate hikes.

While other homebuilders, including Barratt, Taylor Wimpey, Crest Nicholson, and Bellway, have also expressed concerns about the state of the market, Berkeley is seen as more resilient. This is due to its focus on redeveloping land formerly used for industrial purposes and its exposure to the luxury market, particularly in London. Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, noted that demand in the capital is expected to remain stronger than in other areas of the country. However, Chiekrie also acknowledged that Berkeley will face challenges in the short term.

In a trading statement, Berkeley highlighted the considerable uncertainty surrounding the UK economy, including persistently high inflation and interest rates, which continue to deter investment in brownfield regeneration and the wider housebuilding sector. As a result, the company has stated that it will remain selective about new investments and has not acquired any land in the four months leading up to August 31. Berkeley expects forward sales, a key indicator of housing demand, to be approximately £2 billion by the end of October, compared to £2.14 billion at the end of April.

Despite the challenging market conditions, Berkeley has reaffirmed its pre-tax profit guidance of £1.05 billion for the fiscal years 2024 and 2025. This demonstrates the company’s confidence in its ability to navigate the current environment and deliver strong financial performance. However, the company’s shares were flat in early morning trade, reflecting the cautious sentiment surrounding the housing market.

Overall, the British housing market is experiencing a slowdown, with demand weakening and borrowing costs rising. Berkeley’s focus on the luxury market and its exposure to London have provided some insulation from the downturn, but the company is aware of the stormy clouds ahead. With macro-economic, political, and regulatory uncertainties, Berkeley is taking a selective approach to new investments until there is more clarity in the market.

More detail via Kitco.com here… ( Image via Kitco.com )

Latest...

Erc-7621: A Game-Changer in Tokenized Investment Fund Management

Alvara Leads with Implementation of New ERC-7621 Token Standard

Lockbit ransomware gang disrupted by international operation

Ransomware group LockBit is disrupted by a global police operation that includes 2 arrests

Rhode Island-based Attorney John Deaton Announces Republican Run Against Sen. Elizabeth Warren

R.I. attorney John Deaton moves to Swansea, announces run against Sen. Elizabeth Warren

Bitcoin & Crypto Fund Management Revolution with ERC-7621 Token Standard

Alvara Protocol Leverages New ERC-7621 Standard for Fund Management Revolution

More like this

Erc-7621: A Game-Changer in Tokenized Investment Fund Management

Alvara Leads with Implementation of New ERC-7621 Token Standard

Lockbit ransomware gang disrupted by international operation

Ransomware group LockBit is disrupted by a global police operation that includes 2 arrests

Rhode Island-based Attorney John Deaton Announces Republican Run Against Sen. Elizabeth Warren

R.I. attorney John Deaton moves to Swansea, announces run against Sen. Elizabeth Warren