Housebuilder Berkeley Group has said it will stop buying new land and reduce investment in building work while war in the Middle East weighs on the housing market and it grapples with challenging conditions.
Berkeley had said earlier in March that the US-Israel’s war with Iran was “weighing heavily on risk sentiment” and that it was mindful of the potential for higher inflation this year, and for interest rates to stay elevated for longer.
The risk of this slowing recovery in the housing market “has now become a reality”, it said on Wednesday.
It also flagged an “unprecedented” increase in costs and regulation over recent years, and said new rules had lengthened the time it takes between gaining planning approval and starting building work by about a year.
In this context, Berkeley said it “does not believe it can make its required rate of return on investment in new land acquisitions”.
It had therefore decided to stop acquiring new land while conditions “prevail”, except through joint ventures, and focus instead on its existing developments.
Berkeley also said it would reduce investment into construction work that was in progress to match current sales levels.
The London-listed company still expects to make a pre-tax profit of £450 million for the year to the end of April.
Looking ahead, it is forecasting generating more than £1.4 billion in profit over the next four years to 2030.
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Source: This article was originally published by Evening Standard
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