Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
Berkeley has revised its growth and profit plans due to geopolitical tensions and economic pressures affecting the housing market. The company expects pre-tax profits of over 1.4 billion pounds (USD 1.9 billion) from fiscal 2027 to 2030, with margins of 17.5%-19.5%, below previous levels. Rising construction costs and regulatory burdens have led Berkeley to halt land purchases and slow investments, while reducing operating costs to protect its balance sheet. Shareholders will continue to receive returns through dividends and buybacks, though analysts caution about a slower earnings trajectory.
British homebuilder Berkeley has revised its profit outlook, signaling slower growth through 2030 and pausing land purchases. The company cited ongoing Middle East conflicts and the possibility of higher interest rates as factors weighing on the housing market and investor confidence, which caused its shares to drop nearly 19%. Advertisement
Berkeley expects to generate over 1.4 billion pounds (USD 1.9 billion) in pre-tax profit between fiscal 2027 and 2030, with profits slightly skewed toward 2027. The firm also anticipates pre-tax profit of 450 million pounds for fiscal 2026. Operating margins are projected between 17.5% and 19.5%, lower than the above-20% margins achieved in recent years, as the company manages rising costs.
The slowdown in land buying and construction investment is partly driven by escalating building costs following U.S. and Israeli strikes on Iran, as well as Iranian retaliatory strikes. These developments have increased market uncertainty and could keep interest rates higher for longer, affecting the fragile housing recovery. Competitors such as Taylor Wimpey and Bellway have also issued warnings about margin pressures.
Focusing on London, Berkeley noted that rising taxes and regulatory requirements on residential development make it harder to achieve the desired returns on new land purchases. The company has reduced land creditor balances and trimmed operating costs from 178 million pounds to 150 million pounds to safeguard its balance sheet. Despite this, it intends to continue its 2 billion pounds shareholder return programme, ensuring dividends and share buybacks remain in place.
Analysts, however, warn that while shareholders will still benefit from capital allocation efforts, the lower earnings trajectory may disappoint investors. JPMorgan's Zaim Beekawa highlighted that the company's commitment to buybacks and dividends remains strong, but market conditions limit short-term profit growth.
Source Reuters
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
