UK builder Berkeley sticks to earnings forecast despite falling bookings

LONDON (Reuters) – British luxury developer Berkeley Group reaffirmed its profit forecast on Friday but joined other homebuilders in highlighting a grim business environment due to higher borrowing costs and broader macroeconomic concerns.

Britain’s property market has struggled in recent months as demand slowed amid the Bank of England’s efforts to rein in inflation with a sustained streak of interest rate hikes.

FTSE 100 (.FTSE) Member Berkeley reported a 35% drop in private sales bookings in the first four months of its current fiscal year, which began May 1, from a year earlier.

berkeley (BKGH.L)which, unlike its bigger rivals, is focused on redeveloping land previously used for industrial purposes, reiterated its pre-tax profit forecast of 1.05 billion pounds ($1.3 billion) for fiscal 2024 and 2025.

Shares of the company were flat in the early morning.

Other homebuilders, including their elder Barratt (BDEV.L)as well as Taylor Wimpey (TW.L)nicholson crest (CRST.L) and bell tower (WHO L) All have warned about the state of the market.

However, Berkeley is considered to be more resilient, as many of its developments are aimed at the luxury market and it has a greater exposure to London.

“Demand in the capital is likely to remain stronger than in other areas of the country … but in the short term, there are plenty of storm clouds for Berkeley to weather,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

Berkeley, which did not purchase land in the four months to August 31, said it would remain selective about new investment due to macroeconomic, political and regulatory uncertainty.

“Significant uncertainty for the UK economy with persistently high inflation and interest rates continue to deter investment in brownfield regeneration and the housing sector in general,” it said in a trade statement.

Berkeley expects future sales – an industry metric that measures demand for housing – of around 2 billion pounds as of October 31, compared with 2.14 billion pounds on April 30.

($1 = 0.7996 pounds)

(This story was republished to correct a typo in the headline)

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