Berkeley Group Earnings: Undersupplied London Real Estate Market To Support Fiscal 2024 Performance

Berkeley Group continues to traverse the challenging U.K. housing market conditions of 2023 with relative ease. The no-moat homebuilder delivered full-year fiscal 2023 pretax profit of GBP 604 million, broadly aligning with our expectations and its prior guidance. Homeowner demand for Berkeley’s brownfield redevelopment projects has to date remained largely impervious to the cyclical waning of the U.K. housing cycle in 2023, owing to its focus on brownfield redevelopment projects in the undersupplied housing markets of London and southeast England. Indeed, Berkeley retains a robust forward order book—of about GBP 2.1 billion heading into fiscal 2024—that positions Berkeley well as it navigates the cyclical decline in homebuyer appetite and house price headwinds that presently exist. By contrast, 2023 and 2024 are shaping up as a challenging period for volume homebuilders in the U.K. with forward orders falling dramatically in response to the rapid tightening of financial conditions since late 2022.