Berkeley raises the earnings guide after a start & resilient & # 39; during the year when profit collapses and concerns about Brexit
British real estate developer Berkeley has announced an update of at least 5% in its annual earnings guide following a slowdown in the London and South East real estate market.
In the six months to October 31st, pre-tax profit fell to 401 million pounds compared to £ 540 million a year ago and revenue fell 0.7% to £ 1.65 billion, the group said Friday.
The update comes after Berkeley has repeatedly warned of a decline in earnings next year, having previously forecast a decline of about 30 percent despite the sale of 2,027 homes at an average price of £ 740,000.
Berkeley announced it had sold 2,027 homes at an average selling price of £ 740,000 over the six months to October 31st, compared to 2,190 homes at £ 721,000 last year
The group said they appreciated what was a "resilient" start for the year, but warned against an uncertain short-term perspective, as home buyers delayed home purchases prior to Brexit. .
"Berkeley has had a good start to the year and this is reflected in our guide, which has increased for the full year and reiterated for the next two years, based on current market conditions," he said. 39, CEO Rob Perrins.
"This is in the context of a short-term outlook that is clearly uncertain due to the ongoing Brexit process and a series of adverse winds in the operating environment in London and the Southeast.
"This uncertainty affects sentiment and confidence that has a consequent negative impact on investment levels and transaction volumes with a number of developers withdrawing from these markets," said the company.
However, he believes that London will remain a "vibrant, tolerant and diverse global city" that will continue to see demand for housing increase.
Berkeley added that the London and South-East markets "lack urgency" and that underlying demand is limited by high transaction costs and mortgage lending restrictions.
Perrins said that the company supports Prime Minister Theresa May's Brexit withdrawal agreement because it guarantees "frictionless trade".
"Businesses want certainties but people have to be pragmatic, we need frictionless exchanges and the agreement gives us this," he said.
"We are doing well in a difficult market, the price is stable and our cancellation rates have remained stable."