Lewis, reporting preliminary results well in excess of market expectations, said there was strong demand for mixed-use residential developments with commercial and leisure facilities.
Berkeley launched its latest mixed-use scheme last week – the 11-storey Benbow House in central London, designed by Renton Howard Wood. The company has acquired a strong urban brownfield landbank to build similar developments. Lewis said Berkeley now builds 80% of its properties on brownfield sites and more than 90% of its mixed-use schemes on recycled land.
Berkeley recorded pre-tax profit of £110.4m for the year to 30 April 1999, an increase of 10% on last year’s £100.3m. This was ahead of expectations: Schroders, at the higher end, had predicted £106m. Turnover increased from £600m to £697m. This was on fewer house sales at higher prices than the previous year. In all, 2825 homes were sold at an average price of £232 000, compared with 3056 homes at £193 000 in the previous 12 months.
“Silly” land prices last year
Lewis said this did not represent a decision to move away from the middle/lower end of the market. “The driving force is finding the right business for the right land,” he said. He described land prices between May and September 1998 as “silly”. He said that the group had cut the amount of land it bought at that time, purchasing 25% as much as it did in the same period the previous year.
The driving force is finding the right business for the right land
Roger lewis, chairman, Berkeley
Berkeley strengthened its landbank in the autumn when prices fell. Acquisitions included a Unipart site in Oxford and the Battersea Wharf site in London. Land holdings on 30 April were 14 307 units, slightly fewer than last year’s 14 242 units.
Strong London market
“From January through to April, we have seen a positive and sometimes buoyant housing market,” said Lewis. He added that the strong housing market had continued into May and June, and that prospects in the medium-term looked positive.
London was a particularly strong market for the South-east-based firm. A report by property group FPDSavills published this week supports this. It says prices for prime central London residences rose 3.65% in the first quarter of the year, with a similar rise expected in the second quarter.