Berkeley goes to market

Announcing its half-year results last Friday, the developer said it had bought 12 sites covering 1,800 plots in the six months to the end of October, having not bought anything in the previous financial year.

It said: “These include a wide range of sites, from prime London locations in Belgravia and on the river at Battersea, to sites suited to student accommodation and more traditional sites outside London.”

Tony Pidgley, the housebuilder’s chairman, said there were signs of stabilisation in the London and South-east market but said the recession had made it “one of the most turbulent markets I’ve known”.

The company’s operating margin of 17.4% over the period compares to 17.8% for the year ended 30 April 2009. The company said: “This performance has been achieved through Berkeley taking action in the first half of last year to reduce its operating costs by 40%.”

Pre-tax profit was £52m, down from £80m in the same period in 2008, which it said was the result of a fall in turnover from £452.6m to £290m.

It said: “This is due to two factors. Firstly, transactions have fallen to 914 units from 968 units in the same period last year, and secondly, average sales prices have fallen from £399,000 to £299,000 which has been predominantly caused by a change in mix.”

It ended the period with net cash of £345m, up from £285 at the end of April.

The company also blamed high planning costs for making many schemes unviable. The company said section 106 tariffs, affordable housing requirements and infrastructure improvements had not been adjusted to reflect the fall in the market.

Pidgley on the high cost of planning

“This is continuing to make schemes that might otherwise be brought to the market unviable because vendors are not prepared to reflect the planning cost in the land price. The burden is due to increase further with the introduction of the community infrastructure levy and further changes to Building Regulations and this will limit the supply of new land for housing”