FTSE 100 developer signals confidence in Birmingham

St Joseph's Eastside Locks scheme

FTSE 100 developer Berkeley Group, which has a number of schemes under construction in Birmingham, has said it is confident of the long-term resilience and attraction of its markets against a background of political uncertainty.

Berkeley, which recently secured planning for its Eastside Locks scheme to build 769 apartments in Birmingham, and is currently developing a new residential 400-apartment scheme, Snow Hill Wharf in the city’s Gun Quarter through its West Midlands brand St Joseph, issued a trading update which for the period from May 1 to the end of August.

“In the first four months of this new financial year, market conditions in London and the South East have remained robust and consistent with those reported with the full year results in June.  Pricing has remained stable and the group’s forward sales position remains above £1.8bn,” the company said.

“There is good underlying demand for new homes built to a high quality that are well located and properly priced to meet the local housing need, supported by good availability of mortgages.  The wider market remains constrained by high transaction costs and the uncertainty in the macro political and economic environment.”

Berkeley’ said with the land in place for the next phase of its business plan and continued robust trading, last year Berkeley announced the extension of its £280m (£2.22 per share) annual shareholder returns programme to 2025, with a targeted pre-tax return on equity of at least 15% over this period.

Over the six years to 30 April 2025, it is targeting the delivery of £3.3bn of pre-tax profit, with the profit in any one year ranging between £500m and £700m, depending upon the timing of delivery.

The company said:“While very mindful of the potential for short-term market dislocations from the current political back-drop, we remain steadfast in our belief in the long-term resilience and attraction of our markets of London, Birmingham and the South East.

“We continue to work with our supply chain to assess and address the risks associated with disruptive Brexit to the extent this is possible, including accelerating the delivery of certain materials and components.”

A dividend of £25.2m, or 20.08 pence per share, will be paid to shareholders on September 13 with the remainder of the £139.2m return for the six months ending 30 September 2019 having already been satisfied through share buy-backs.

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