Berkeley Group: capital returns

High-end property developer Berkeley Group (BKG) – which bills itself as “the country’s leading place-maker” – today renewed its commitment to the London market, arguing that the effects of the pandemic will fail to engender “a permanent structural shift that has the capacity to reverse urbanisation or detract from the attraction of a global city”.

You’d better hope so if you’re in the business of selling homes in the capital and the South East of England for an average £770,000 each – as Berkeley managed to do in the 12 months to 30 April. That was up from an average of £677,000 the previous year, when the developer also sold fewer properties.

So, while run-rate profits are below the boom years of 2017 to 2019, the cash-rich group has good reason for confidence, particularly after buoyant prices for land holdings and additions pushed up estimated future gross profits from £6.4bn to £6.9bn in a year. That suggests capital returns – which edged up £280m to £334m – can continue to climb. Hold.

Last IC view: Hold, 4,442p, 13 Jan 2021