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Berkeley profits soar thanks to a £60million surge in new home sales

Berkeley shows the rise in demand for new homes in London and the South East is not abating as profits soar £60m, helped by an average selling price of £600k

  • Berkeley reported a £59.7 million increase in profit to £482.4 million for the year ended April 30
  • The company sold 42% more homes last year and increased revenue by £145.8m
  • His home sales in London have benefited from the opening of the Elizabeth Line

The Berkeley Group has reported another record full-year results thanks to a surge in home sales across London and the south-east of England.

The FTSE 100 company posted a £59.7m increase in profit to £482.4m for the year ended April 30 as it continued to benefit from a UK property market buoyed by high demand, undersupply and low mortgage rates became.

The Surrey-based company noted that demand for housing in the capital had been supported by the easing of Covid-19 restrictions, a recovery in office work and the recent opening of the Elizabeth Line.

As a result, the company managed to sell 42 per cent more homes than last year and boosted earnings by £145.8m, despite new properties selling at an average selling price of £603,000.

Strong Results: The Berkeley Group posted earnings and sales growth as it continued to benefit from a UK property market supported by strong demand and severe undersupply

However, the high price of new homes is so high that it offsets the higher costs Berkeley has incurred from building materials, labor and other supply chain issues.

The value of underlying sales reservations also rose by a quarter to “slightly above” pre-pandemic volume, while forward sales rose by around £500m to £2.17bn at the end of April.

Berkeley claims its housing market fundamentals “remain strong”, even amid rising house prices and recent rate hikes due to housing shortages in London and south-east England.

She pointed to UK government data showing that just 39,000 homes have been delivered in the capital over the past three years, compared to an annual housing need of 94,000.

New Railroad: The Berkeley Group has found that demand for their new homes in the capital has been fueled by the recent opening of the Elizabeth Line

New Railroad: The Berkeley Group has found that demand for their new homes in the capital has been fueled by the recent opening of the Elizabeth Line

Berkeley attributed most of the growth in forward sales to acquiring National Grid’s 50% stake in the St. William Homes joint venture in March.

The purchase meant the group became owners of 24 properties with over 20,000 future homes, one of which was a new development on Prince of Wales Drive in Battersea.

The company has also added four new properties to its land holdings, including a shopping center in Peckham, the former Ram Brewery site in Wandsworth and properties in Milton Keynes where it has received planning permission to build 4,600 new homes and 403,000 square meters of logistics space.

Chief Executive Rob Perrins said: “These strong results reflect the stability of our uniquely long-term operating model during an exceptionally volatile period.

‘They are underpinned by our portfolio of large brownfield regeneration projects, where patient and sustained investment is transforming unused land into self-contained and highly sustainable mixed-use residential communities in the UK’s most underserved markets.’

The company told investors it forecasts a pre-tax profit of around £600m this year, followed by £625m in the two years thereafter. In addition, they said £282m would be returned to shareholders over the next three years.

However, despite the release of exceptionally strong results, Berkeley Group shares It fell 5.1 percent to £35.97 in morning trade, meaning its value is down over a quarter so far this year.

Mark Crouch, analyst at investment platform eToro, comments: “Annual real estate price growth is expected to halve by the end of the year as a toxic combination of runaway inflation and rising interest rates weighs on real estate demand.

“Berkeley’s numbers are solid, but the share price, which is down more than 23 percent since the beginning of the year, suggests investors are concerned about market conditions.

‘While this is clearly a concern, Berkeley has a strong balance sheet and we believe it will be able to weather any downturn in the broader housing market.’

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Berkeley profits soar thanks to a £60million surge in new home sales

Source link Berkeley profits soar thanks to a £60million surge in new home sales

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