Berkeley Group Holdings PLC on Wednesday said housing undersupply in London, combined with an improvement in affordability due to lower interest rates, is improving its outlook.
The Surrey, England-based housebuilder reported pretax profit of £254.0 million for the six months that ended October 31, down 7.7% from £275.1 million a year before.
Revenue decreased by 4.8% to £1.18 billion from £1.28 billion.
The operating margin expanded to 20.8% from 20.2%, while return on capital employed was 15.5%, lower compared to 17.5% a year ago.
Berkeley said it is on track to deliver on its pretax profit guidance for financial 2026 and 2027. This is for pretax earnings of £450 million forecast in the financial year ending April 30, 2026, down 15% from £528.9 million in financial 2025.
The expected decline in profit comes as the company invests in its build-to-rent platform, part of its Berkeley 2035 strategy. It expects a similar level of profit in financial 2027.
In support of its outlook, Berkeley noted the UK government’s focus on housing supply.
‘Berkeley’s outlook for its markets remains positive. London’s enduring global status, exceptional connectivity, and cultural vibrancy continue to underpin demand. It remains the biggest financial centre in Europe and second biggest in the world. It is ranked similarly for inbound real estate investment and attracts almost three times as much foreign direct investment as any other European City. Oxford Economics ranks it the number one city in the world for human capital and it is the leading global city for tech HQs over the last five years.
‘Coupled with the structural undersupply of new homes in the capital, these dynamics provide long-term support for capital values and rental growth. With a portfolio of high-quality, well-connected developments across London - available for both sale and for rent - Berkeley is well placed to capture demand as market conditions improve.’
Executive Chair Rob Perrins said: ‘While near-term sentiment remains cautious, the long-term outlook is more positive; particularly in London, where undersupply is compounding and affordability is gradually improving with falling interest rates, improved mortgage availability, strong wage growth, and stable pricing. With the budget uncertainty behind us, now is a good time for customers with the ability to buy, to do so, and take advantage of the prevailing market dynamic.’
Berkeley undertook £132.0 million in share buybacks during the recent half-year, up sharply from £23.3 million a year ago.
The company did not declare an interim dividend. It paid £2.07 a year prior.
Back in September, the company had announced that it completed its 2011 shareholder returns programme, amid a focus on its Berkeley 2035 strategy which it launched in December 2024. Berkeley had said it will make shareholder returns via a combination of share buybacks and dividends under a ‘flexible capital allocation model’.
Further, Berkeley announced that Barbara Richmond, who was chief financial officer at fellow housebuilder Redrow for 14 years before it became Barratt Redrow PLC, is joining its board as a non-executive director on January 1.
Berkeley shares were up 2.0% to 3,650.00 pence each on Wednesday morning in London.
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