OVERSEAS buyers hunting for a property bargain in London helped support earnings at British upmarket apartment developer Berkeley Group in the past year, the company said yesterday.
Berkeley, which has championed deluxe riverside developments in London, said its focus on the capital and the south-east had helped prop up sales during the downturn, as equity-rich foreign investors are lured by attractive pricing and a weak sterling.
'Our location helps a lot; London has got the Olympics coming, it's got the business sector, everyone thought businesses would relocate, but the coalition government is a lot more business-friendly, that's a very good start for us,' Berkeley's managing director Rob Perrins told Reuters.
Mr Perrins said 30 per cent of investors are now from outside the UK, more than double the historic level of 12 per cent .
Berkeley said the domestic market had stabilised during the year and had recovered after a temporary blip around the election in May, but remained at a relatively subdued level.
The group reported a pretax profit for the year to end-April of £110.3 million (S$229.4 million), down 8.4 per cent on the year before but topping expectations in a range of £97.8 million to £108.5 million according to a Thomson Reuters I/B/E/S poll of nine analysts.
Revenue fell 12 per cent to £615 million.
Berkeley had in March signalled that it would report results at the higher end of analyst expectations.
British housebuilders breathed a sigh of relief after the new coalition government's emergency budget unveiled no nasty surprises for the sector on Tuesday.
However, builders are not out of the doldrums yet as fears of further macroeconomic gloom and rising unemployment stunts optimism with mortgage lending still at depressed levels.
Berkeley said it would not pay a dividend despite its strong cash position, choosing to focus on land investment which it is aiming to grow by 10 per cent this year.
'Some had expected a 10p dividend to be made . . . we always expected this later in the cycle and . . . we do expect Berkeley to hand potentially sizeable sums back to shareholders across the next five years,' said analyst Robin Hardy at brokerage KBC Peel Hunt.
In the year, the company agreed to buy 2,200 plots across 20 sites in London and the south-east. The developer sold 2,201 residential units at an average £263,000, compared with 1,501 units at an average £395,000 last year.
Berkeley shares were up 0.7 per cent at 805-1/2p by 0933 GMT, still well below a 1,650p peak set in mid-2007. -- Reuters
Source: Business Times, 26 Jun 2010