April 1 (Reuters) - British high-end homebuilder Berkeley said on Wednesday that it would stop buying new land and reduce work in progress as geopolitical volatility and challenging economic backdrop
Homebuilder Berkeley reins in profit outlook, land buying as Iran war dampens recovery
Berkeley's Profit Outlook and Market Response
By Raechel Thankam Job
April 1 (Reuters) - British homebuilder Berkeley warned of a slowdown in profit growth through 2030 and said it would halt land purchases as the Middle East conflict and likely higher borrowing costs dampen hopes of a housing market recovery, sending its shares down nearly 19% on Wednesday.
Profit Projections and Construction Investment
As the company slows construction investment to match weaker sales, it now expects to earn more than 1.4 billion pounds ($1.9 billion) pre‑tax over the four years from fiscal 2027 to 2030, implying an average of 350 million pounds a year.
The high-end homebuilder is expecting a pre-tax profit of 450 million pounds for fiscal year 2026.
Impact of Middle East Conflict
The update comes as missile strikes by Iran, the U.S. and Israel in the Middle East push up building costs and risk keeping interest rates higher for longer, threatening the fragile demand recovery and prompting margin warnings from rivals such as Taylor Wimpey and Bellway.
Taxes and Regulatory Challenges
Increasing Burdens on Residential Development
TAXES AND REGULATIONS WEIGH
London-focused Berkeley said it can no longer achieve its required rate of return on new land purchases due to increasing tax and regulatory burdens on residential development.
Land Prices and Joint Ventures
"Where residential transactions have been taking place, land prices have been overheated," the company said, adding it will for now only buy new land through joint ventures.
Builders have warned that developer taxes, safety levies and planning delays are limiting housing output.
Market Recovery and Analyst Commentary
Fading Hopes for Early Recovery
EARLY RECOVERY HOPES FADE
Berkeley had begun to see signs of recovery in early 2026, but earlier concerns that the Middle East conflict would hurt demand and affordability has "now become a reality", it said.
Land Bank and Market Flexibility
"Its currently strong land bank allows them to flex the delivery in the near term and allows them to react and deliver growth if the market and operational backdrop improves beyond FY26," Investec analyst Aynsley Lammin said.
Berkeley's shares fell to their lowest since December 2016 after Wednesday's update.
($1 = 0.7528 pounds)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Mrigank Dhaniwala, Subhranshu Sahu, Emelia Sithole-Matarise and Arun Koyyur)
