House builder Berkeley Group has been cracking on with development at its Grosvenor Waterside site on the outskirts of Chelsea, as a result of which this year's earnings are likely to be towards the top end of brokers' forecasts.
Trading since the beginning of May have been in line with the board's expectations, Chairman Tony Pidgley is set to tell shareholders at the firm's annual general meeting on Wednesday.
Out of the 185 remaining properties at Grosvenor Waterside which had previously been forecast to be delivered over the next three years, 149 have already been completed, benefitting earnings in the current year.
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Market conditions continue to remain resilient,especially in London, which has seen its appeal enhanced by the Queen's Diamond Jubilee celebrations and the Olympics, Pidgley believes.
A limited supply of quality new housing, particularly in the best locations in London and the South East, continues to provide strong support for house prices despite the underlying economic conditions and lack of "feel good" factor.
Pidgley's statement threw down a challenge to the government, calling for more help to the house-building industry to help kick-start the economy.
"Every home built by Berkeley creates some 3.5 jobs alongside the associated benefits of affordable housing, infrastructure improvements, creating fantastic new homes and vibrant places," Pidgley notes.
"The government has a vital role to play in stimulating investment by creating a stable, consistent and transparent platform to allow housing to be developed, however the changes in planning and the consultation on the taxation of residential properties have introduced uncertainties for businesses such as Berkeley," he grumbles.
"Consequently, this is expected to lead to lower levels of investment in house building generally. This means for Berkeley that we will maintain a strong and flexible balance sheet while investing more selectively in land and construction and therefore expect to be cash generative in the first half," Pidgley reveals.
The group has announced its intention to return £13 per share to shareholders by 2021 while maintaining balance sheet strength at a similar level to that seen at the end of April 2011, and said it remains on course to achieve this.
JH
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