Berkeley Group has issued a strategy and trading update, warning that recent global instability has snuffed out the early signs of a market recovery it had begun to see at the start of the year.
The builder is starting to feel the pressure of a housing market slowdown and has provided an update on plans to address the changing face of the UK property market.
But the FTSE 100 housebuilder still expects to deliver pre-tax profit of £450 million for the year ending April 2026, in line with guidance set two years ago, which makes the 16% drop in shares on Wednesday seem a little harsh.
The group has also taken a medium-term approach to guidance and is now targeting cumulative pre-tax profit of £1.4 billion over the four years to FY30.
From a strategic perspective, Berkeley is leaning hard into its existing landbank rather than chasing new sites. With over 50,000 homes already in its portfolio across London and the South-East, the company believes it can add £2 billion in value through planning optimization alone, without acquiring a single new plot.
The group’s build-to-rent arm, Berkeley Living, continues to progress. Its first six buildings are on track for completion in FY28, representing around £400 million of investment at cost. Early lettings at Foundry Yard, its debut BTR building at Alexander Gate, are reportedly ahead of expectations.
Berkeley is also pushing down costs, having already trimmed operating expenses by 25% in real terms from £178 million to £150 million, while cutting land creditors from £900 million to around £470 million.
On shareholder returns, £336 million of the £2 billion Berkeley 2035 target has been distributed. With the share price trading below net asset value per share the board is prioritising buybacks as the most efficient way to return capital.