UK homebuilder Berkeley targets rental market, raises outlook
BERKELEY lifted its earnings outlook on Wednesday (Jun 19), the first FTSE 100 homebuilder to do so in more than two years, and said it would start a build-to-rent platform, encouraged by strong demand for rental homes in London and South East England.
Sticky inflation in Britain had clouded the outlook for monetary policy easing, tempering expectations of a swift recovery in the housing market despite signs of stability at the start of 2024.
Berkeley CEO Rob Perrins said the build-to-rent segment to be developed over 10 years was aimed at maximising returns in the current market conditions, and the group has identified about 4,000 homes across 17 brownfield regeneration sites as an initial portfolio for the platform.
Estate agency Savills earlier this year said that an additional one million rental homes are required by 2031 if the nation is to address a growing rental crisis.
“The Build-to-Rent platform... points to the significant potential in the private rental market,” RBC Capital Markets analysts wrote in a note.
High-end builder Berkeley, which unlike its bigger rivals, focuses on redeveloping land that was previously used for industrial purposes, said the current lack of urgency in the housing market was likely to remain until interest rates begin to come down.
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British inflation returned to its 2 per cent target in May for the first time in nearly three years, data showed on Wednesday, but underlying price pressures remain strong, meaning the Bank of England is likely to wait longer before cutting rates.
Berkeley, which operates across London, Birmingham and the south of England, reported an 8 per cent fall in pretax profit to £557.3 million (S$958 million) for the year ended Apr 30.
That beat the £549.5 million expected by analysts, LSEG data showed.
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The company expects a fall in 2025 pretax profit but raised its outlook by 5 per cent to £525 million citing “good enquiries” for homes in the country’s most under-supplied markets. REUTERS
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