Berkeley Group Holdings plc has reaffirmed its £450m pre-tax profit target for the current financial year, despite warning that geopolitical tensions, inflation risks and regulatory delays continue to weigh on the housing market.
In a trading update covering the period from November to the end of February, the London-focused developer said it still expects to deliver around £450m in pre-tax profit this year and a similar level in 2027.
The group is also targeting a year-end net cash position of roughly £300m. This follows the settlement of more than £250m of land creditors, the return of £191m to shareholders so far this year and continued investment in its build-to-rent platform, Berkeley Living.
Despite the stable profit outlook, Berkeley warned that market conditions remain fragile.
The developer said consumer confidence continues to be constrained by wider macroeconomic uncertainty and geopolitical developments, with the emerging situation in the Middle East adding further pressure to buyer sentiment.
The company also highlighted the potential for renewed inflationary pressures and the possibility that interest rates could remain elevated for longer than expected, both of which could further affect housing demand.
Even so, Berkeley said there are signs that buyer activity is beginning to recover following a slowdown that occurred around the time of the autumn Budget.
Sales enquiries remain strong and the value of underlying reservations has been improving, gradually moving back towards levels recorded last summer before the pre-Budget pause in activity.
For purchasers with available liquidity, the developer suggested that current market conditions may offer opportunities.
Berkeley said the present market dislocation could present attractive buying prospects for some buyers.
Alongside its sales activity, the company said it is reviewing planning permissions across its development pipeline to restore project margins before bringing schemes forward into production.
The developer also welcomed proposals from the UK Government and the Greater London Authority to introduce a “Homes for London” package aimed at improving the financial viability of housing developments in the capital.
However, Berkeley again raised concerns about delays linked to the regulatory environment surrounding new residential construction.
The company warned that the operation of the Building Safety Regulator continues to slow the delivery of new housing projects.
It said the early implementation of the BSR framework had significantly affected the supply of new homes across London and other major urban areas.
While Berkeley acknowledged that some progress has been made in recent months, it added that approvals within the regulator’s prescribed timeframes remain uncommon rather than routine.
