Berkeley Group’s belief in London is ‘resolute’ despite pandemic hit
Berkeley Group has reaffirmed its commitment to London even as its profits took a hit from pandemic uncertainty.
Chief executive Rob Perrins said the company’s “belief in London and our developmetn approach is resolute” as it reported its interim results.
The company has acquired three sites in London this year – Borough Triangle in Southwark, a land parcel in Paddington, and in Sutton.
It comes as the FTSE 100 firm reported a 16.6 per cent drop in profit for the first half of the year to £230.8m, below expectations of £240m. This was in large part because the number of homes sold during the period fell to 1,104 from 1,389 from a year earlier.
Covid-related costs also increased its cost base at the start of the pandemic.
There was a spike in demand for homes following the introduction of a stamp duty cut on property sales of up to £500,000 by Chancellor Rishi Sunak in July. Berkeley reported forward sales increased to £1.94bn at 31 October, up from £1.84bn at the end of April.
Berkeley said it is now on track to deliver its annual pre-tax profit outlook of around £500m.
“Berkeley management can see what all of us can; the housing sector is buoyant thanks to pent-up demand from lockdown, people are moving to get more space or a different set-up having experienced weeks at a time indoors this year, and a temporary stamp duty holiday is providing a tailwind to sales activity,” said Russ Mould, investment director at AJ Bell. “However, unemployment is mounting and if an unruly Brexit further dents consumer confidence then this will eventually lead to pressure on the property market.”
“Sometimes this can be a recipe for eventual disappointment as a company is unable to make up a shortfall in the second half,” Mould added.
Shares in Berkeley are down 0.95 per cent.