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UK’s Berkeley turns to build-to-rent segment; raises earnings view
Global Banking & Finance Review®
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(Reuters) -British high-end homebuilder Berkeley lifted its earnings outlook by 5% for fiscal year 2025 on Wednesday and said it would establish a build-to-rent platform, encouraged by strong demand for rental homes in London and South East England.
(Reuters) -British high-end homebuilder Berkeley lifted its earnings outlook by 5% for fiscal year 2025 on Wednesday and said it would establish a build-to-rent platform, encouraged by strong demand for rental homes in London and South East England.
Sticky inflation in Britain has 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 launch of the build-to-rent segment was aimed at maximising returns in the current market conditions, and the group has identified about 4,000 homes across its 17 brownfield regeneration sites as an initial portfolio for the platform.
The company, 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 the start in reduction of interest rates.
Berkeley, which operates across London, Birmingham and the South of England, said pre-tax profit was down 8% at 557.3 million pounds ($708.4 million) for the year ended April 30. But it beat analysts’ average expectations of 549.5 million pounds, according to LSEG data.
The company raised its annual outlook for pre-tax profit to 525 million pounds, saying that it continued to benefit from a strong order book and good enquiries for homes in the country’s most under-supplied markets.
($1 = 0.7867 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich)
Build-to-rent refers to residential properties specifically constructed for renting rather than selling. This model aims to provide high-quality rental options, often with amenities and services tailored to tenants.
Pre-tax profit is the income a company earns before deducting taxes. It reflects the company's profitability from its operations and is a key indicator of financial performance.
Sticky inflation refers to a situation where prices remain high despite changes in economic conditions. It can hinder monetary policy effectiveness and complicate recovery efforts in the economy.
Brownfield regeneration sites are previously developed lands that may be contaminated or underused. Redeveloping these areas can revitalize neighborhoods and provide housing or commercial opportunities.
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