‘London will flourish again’ says Berkeley Group as it lands £500m profit
London received a vote of confidence from Berkeley Group this morning as the housebuilder’s boss said he believed the capital is set for a post-pandemic boom.
The Group made a profit before tax of more than half a billion pounds in its last financial year, much of which was driven by the sale of properties worth more than £700,000, it confirmed to markets this morning.
The housebuilder saw profit before tax of £518.1m, up slightly from £503.7m in its last financial year.
Revenue at the business stood at £2.2bn for the year, up from £1.9bn last year.
Berkeley said it sold 2,825 homes in London and the South East at an average selling price of £770,000, which helped to drive revenue for the year.
Chief executive Rob Perrins said: “Today’s strong results reflect the consistent and focused application of Berkeley’s uniquely long-term business model, the quality of the homes and places we create and our proficiency in adapting to the challenges of the pandemic, sustaining production throughout.”
The housebuilder added 10 new brownfield sites to its land holdings in the last year, the equivalent to 6,650 new homes for the future, and advanced a further 7,000 homes in its immediate pipeline.
Despite the housing boom, the value of Berkeley’s private sales was 20 per cent lower than in the previous financial year.
The business, which last year built 10 per cent of new homes in London, said the capital would thrive again when Covid restrictions had been lifted.
“This is a very strong platform from which to continue serving the most under supplied housing markets in the country once the disruption caused by the pandemic dissipates and London is again able to flourish as a global destination for culture, entertainment, education, recreation and business,” Perrins continued.
“London is one of the world’s greatest open and welcoming cities and it has been wonderful to witness its vibrancy returning over recent weeks, with the gradual lifting of restrictions. People thrive on its energy, opportunity and unparalleled attributes.”
Berkeley Group’s share price fell 2.28 per cent shortly after the market open, as investors reacted to relatively flat results when compared with last year.
London exposure ‘blessing and a curse’
Anthony Codling, CEO of property platform Twindig, said: “In a period covering lockdowns one, two and three, Berkeley Group has grown revenue, grown profits and increased the number of homes it sold.
“We may have embraced working from home, but it appears that not all are leaving London and the South East in search of a rural idyll.
“Looking ahead, Berkeley has a very strong balance sheet, a strong order book and more than £1bn of cash in the bank. If Berkeley were playing in Euro’s it would be Berkeley 1 Pandemic nil.”
Richard Hunter, head of markets at Interactive Investor, added: “Berkeley’s heavy exposure to London has been both a blessing and a curse, although the company remains convinced of recovery in the capital.
“The effects of the pandemic on the London market put pressure on its traditional home buyers, where there is a broadly even split of owner-occupiers and (overseas) investors. With international travel restrictions muddying the picture, let alone the aftermath of Brexit, this core market for the group has been under pressure.
“Despite these developments, the London market remains one where there is strong undersupply, and Berkeley remains committed to its presence.
“There is a clear debate on the lasting effects of the pandemic on city life, as some buyers have chosen to move to more rural areas and as the requirements for commuting have significantly reduced. By the same token, London has its own idiosyncratic attractions which the group believes remain intact.
“Indeed, London enquiry levels are currently higher than those seen in pre-pandemic times.”