Berkeley Group looks beyond London

On that score, figures for the 12 months to April provide both vindication and cause for concern. Having set a low bar, pre-tax profits came in at the top of market forecasts, while net asset value (NAV) per share rose 19 per cent. The cash balance also surged 42 per cent, in part due to favourable movements in working capital. Sales prices have also stayed above business plan levels, “broadly” offsetting build cost increases in the process.

However, the profitability of Berkeley’s joint ventures have collapsed, with equity-accounted income down from £163m to just £8.8m. This reflected a 17 per cent increase in investments, and a sharp drop in both home sales and the average selling price within St Edward, Berkeley’s tie-up with Prudential.

And while forward guidance hasn’t worsened, the shifting (or deteriorating) expectations for the London property market means this year’s pre-tax profit is expected to fall by around a third. The pre-tax return on equity is eventually expected to settle at “around 15 per cent”.

Getting there appears to require a trip outside the M25. A focus on high-end London apartments has long differentiated Berkeley from housebuilder peers, though just three of the 11 developments launched in the period were in the capital. How this can be squared with a sales mix currently split between owner-occupiers and investors remains unclear, although at least Berkeley – as a champion of "social value" – will be able to trumpet a lower reliance on London-obsessed overseas buyers.

Consensus forecasts are for adjusted EPS of 341p in the year to April 2020, though just three of the 18 firms covering Berkeley rate its shares a ‘buy’. Still, short interest has dipped in the past year, suggesting hedge funds no longer view the stock as a sure-fire way to bet against a jittery London property market.