Berkeley Group expects to complete around 30% more homes this year than at the peak of the market in 2007.
In an upbeat trading update for the period from 1 November 2013 to 28 February 2014, Tony Pidgley’s housing group said the government’s Help To Buy scheme had contributed to increased activity.
“Alongside a positive trading environment and a period of wider economic growth, Help to Buy has increased activity in the property market and so has helped the acceleration of delivery of new homes across the sector,” it said.
It added: “We are working to deliver more, but reiterate the importance of maintaining a stable and predictable regulatory and taxation environment to enable this continued investment.”
Berkeley said it had employed more than 10,000 people on its sites, contributing to local communities and building more than 10% of all new affordable homes in London over the past six years.
The group also confirmed strong sales of new-build properties, saying cash due on forward sales for the period was now in excess of £1.9bn – up from £1.75bn at 31 October 2013, reflecting the continued demand for new homes in London and the South of England.
Following payment of a dividend of £117.9m – reflecting 90p per share – on 17 January 2014, the group remains ungeared.
Berkeley has now paid £1.64 per share in dividends, equivalent to £215m, towards the first milestone of £568m by September 2015.
This leaves further dividends of £2.70 per share to be paid by the first milestone date and the board is satisfied that Berkeley is well placed to achieve this through a series of regular dividends.
As previously stated, Berkeley has the land with implementable planning permissions in place that will enable the group to achieve the second milestone, equivalent to further dividends of £4.33 a share by September 2018.
The group has increased its land holdings with the acquisition of five further sites since the half year.
Of these, two will be immediately added to its land holdings and three sites will be included in the firm’s future pipeline as they are controlled conditionally, dependent on securing a planning permission and vacant possession.
Berkeley said this activity left the group well-positioned to maintain the estimated future gross margin in its land holdings at £3bn while continuing to deliver sustainable returns on equity.
Approximately 86% of the group’s land holdings have an implementable planning permission and all of these sites are in the course of construction.
In light of the progress made in the delivery and completion of Berkeley’s developments in the period, the board reiterated its previous guidance that full-year earnings are likely to be towards the top of the range of analysts’ current expectations.
bridget.o’connell@estatesgazette.com
